NIFTY Weekly price action analysis – 9-September-2011

This item was filled under [ Traders zone ]

Here is the Nifty weekly chart with trend lines, trend channel and swing points marked on it.

Weekly Price Action analysis of NIFTY

Weekly Price Action analysis of NIFTY

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

Bullish reasons -
1) We had weekly Green bar indicating continuation of bullish move in short term.

2) Balance price of weekly bar (my fastest trend reversal indicator) had turned bullish last week on weekly chart and continue to stay in bullish mode this week too.

3) Weekly volume has been very good supporting the upmove.

4) Weekly close is above the psychological level of 5000.

Bearish reasons -
1) Friday’s bearish bar has taken away the upmove of previous 2 days indicating emergence of selling.

2) Price has dropped from the previous support level of 5177, which acted as resistance on daily chart. Will have to wait till next week to see if that also becomes weekly resistance level or not.

3) Market closed at more or less same level as previous weeks close indicating new strength in trend.

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 was around 5177/5200 level. Market needs to cross this level to show any further sign of strength. Looking at global weakness, it is going to be a challenge.

2) Market faced resistance at supply zone of 5200/5300.

3) Volume has been high on last 2 days of the week, indicating that accumulation might be in progress. My tracking of FII flows also giving the sign of short term bottom formation.

4) I will not call it as end of bearish trend. This could very well be a bearish rally. We are still in down trend, global markets are still going down. In such situation, it is better to wait for more confirmation before we call it return of bull market.

Important levels to watch for – For up-move – 5200/5300, For down-move – 4700, 4800. For sideway – 4950 to 5200.

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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