NIFTY Weekly price action analysis – 1-July-2011

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

NIFTY Weekly Price Action Analysis - 1-July_2011

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

Bullish reasons -
1) Price has broken previous swing high and has closed above that.
2) Bullish hammer bar was formed in last week indicating reversal which is followed by high volume, bullish, wide range bar in this week
Bearish reasons -
1) Price has reached near the down trendline from Nov-2010 high.
2) Price is also testing the break of uptrend line from July-09 low (green line). This line was broken in first week of May-11.

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 5900-6000 level. If next bar moves up, then it might be able to test this supply zone.
2) As price has already advanced 520 points without any retracement, hence it is very likely that it will pause for sometime before making new move. In other words, we might see a Narrow Range, low volume bar in next week.
3) If new supply comes in at the resistance zone of Downtrend line, we might see price coming back below Swing high at 5602 that it broke recently and make new lower low.

Important levels to watch – For up-move – 5705, 5900, For down-move – 5600, 5430. For sideway – 5705, 5430.

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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