NIFTY Weekly price action analysis – 5-August-2011

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Here is the Nifty weekly chart with trend lines, trend channel and swing points marked on it.
NIFTY Weekly 5-aug-2011

Let’s take a look at NIFTY’s weekly chart and do the analysis based on facts shown by price action-

Bullish reasons -
Probably many might say that it is difficult to find bullish reason out of this week’s strong bearish price action. But I see atleast some points.

1) There was lower volume this week compared to previous week

2) Friday’s daily bar has made a nice hammer bar /pin bar indicating bulls are coming back. shown higher volume. This bar has also shown higher volume indicating that selling has been absorbed.

3) Weekly close has been above the previous support level.

4) Price has come very close to the lower channel line of down trending channel.

5) Market is oversold after non-stop selling of last 9 days.

Bearish reasons -
1) Market is in grip of bears and downtrend has been strong.

2) Range of weekly bar has increased indicating increasing strength of bears.

3) Volume has been less then previous week, which might be sign of trend continuation.

4) Long term trendline from Mar-2009 low has been broken in this week with wide bar price action. Going forward, this line with act as resistance for any move.

Interpretation and possibilities for next week -
As a trader, we have to be prepared to face anything that market throws on us. So lets see what might come in next week.
1) Nearest supply zone is around 5700-5750 level. Price has been rejected by this zone in last 5 weeks. Any upmove is likely to face resistance at 5500 first and 5700 level.

2) Demand zone is 5300-5250 level was broken this week. I have marked new demand zone in 4700-4800 level.

Important levels to watch for – For up-move – 5530, 5650, 5705, For down-move – 5000,4900, 4700. For sideway – 5500, 5120.

Hope this analysis helps you in forming your own views on market. Feel free to drop your comments on the post. Let me know if you would like to see something more in the analysis.

Disclaimer These are my views on the market and I could be wrong in reading it. Please use your own judgment and make sensible trading decision based on your own analysis.

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