Current technical evidences in Nifty Future deserve some attention. We have seen a huge rally in last six months. It all started with a 'W' formation, which is considered as strong bullish reversal pattern. The zone is marked as 'a' in the chart. It happened in February' 2016.
Price started advancing thereafter in a decent manner and was well supported by volume. We marked the zone as 'b'. This strong up-move happened between March'16 to third week of May'16. Price travelled to little less than 8000 from low of 6850 in this period. 17% rise in 11 weeks. This move of an Index is remarkable at any standard.
Rally did not fizzle out at that point. Nifty Future continued to move northwards by another 750 points to hit a high around 8750 in this month. Pricewise, there is nothing to complain about this 9.5% upmove, though volume remained low in this period. We have marked this period as 'c' in the attached chart.
Tiredness is clearly visible in chart of Nifty Future for last 2-3 weeks. Looking at the weekly highs of past two week, fatigue is further confirmed. High was around 8750 in last two weeks and this week also we have seen a similar high.
The chart also reveals a notorious pattern referred as 'rising wedge'. The pattern consists of two upward sloping converging trend line. This happens because of different angles of the trendline. Resistance line has lower angle than the support line and that happens when price becomes tired.
In this phase longs are not that rewarding. However, shorts are not beneficial but bears are not losing huge money. In fact, short sellers are in no profit, no loss scenario in last couple of weeks. Then is it an indication of sell off? No body knows the answer but, it should be wise to remain cautious during a rising wedge formation.
In a different angle, we have a potential double top around 8750 with confirmation level being 8550. Break below 8550 may have a target of 8350 but 8480-8500 is strong support.
Coming back to the rising wedge formation, decisive break below 8550 may prove fatal for bulls. 8500 is also a strong level to watch as there lies a moving average, which has guarded this rally three times on lower side.
Break and stay above 8750 will nullify there bearish consideration. Nifty may challenge all time high of 9100-9200 on decisive crossover above 8750. But we feel that as an remote possibility.
One thing to remember, Nifty cannot move southwards when global markets are strong. So the fall of Nifty, if at all, will come along with weakness in global markets. We are witnessing same tiredness in the chart of Dow Jones Industrial Average. Coincidence or connection! Only time will tell.
Aug 8500 Put closed at 56 on 10.08.16. Can we consider this option?
Disclaimer - The views here expressed and the charts shared are strictly for educational purpose and not a guideline for buy or sell. The author will not be responsible for any loss, that may occur.
Price started advancing thereafter in a decent manner and was well supported by volume. We marked the zone as 'b'. This strong up-move happened between March'16 to third week of May'16. Price travelled to little less than 8000 from low of 6850 in this period. 17% rise in 11 weeks. This move of an Index is remarkable at any standard.
Rally did not fizzle out at that point. Nifty Future continued to move northwards by another 750 points to hit a high around 8750 in this month. Pricewise, there is nothing to complain about this 9.5% upmove, though volume remained low in this period. We have marked this period as 'c' in the attached chart.
Tiredness is clearly visible in chart of Nifty Future for last 2-3 weeks. Looking at the weekly highs of past two week, fatigue is further confirmed. High was around 8750 in last two weeks and this week also we have seen a similar high.
The chart also reveals a notorious pattern referred as 'rising wedge'. The pattern consists of two upward sloping converging trend line. This happens because of different angles of the trendline. Resistance line has lower angle than the support line and that happens when price becomes tired.
In this phase longs are not that rewarding. However, shorts are not beneficial but bears are not losing huge money. In fact, short sellers are in no profit, no loss scenario in last couple of weeks. Then is it an indication of sell off? No body knows the answer but, it should be wise to remain cautious during a rising wedge formation.
In a different angle, we have a potential double top around 8750 with confirmation level being 8550. Break below 8550 may have a target of 8350 but 8480-8500 is strong support.
Coming back to the rising wedge formation, decisive break below 8550 may prove fatal for bulls. 8500 is also a strong level to watch as there lies a moving average, which has guarded this rally three times on lower side.
Break and stay above 8750 will nullify there bearish consideration. Nifty may challenge all time high of 9100-9200 on decisive crossover above 8750. But we feel that as an remote possibility.
One thing to remember, Nifty cannot move southwards when global markets are strong. So the fall of Nifty, if at all, will come along with weakness in global markets. We are witnessing same tiredness in the chart of Dow Jones Industrial Average. Coincidence or connection! Only time will tell.
Aug 8500 Put closed at 56 on 10.08.16. Can we consider this option?
Disclaimer - The views here expressed and the charts shared are strictly for educational purpose and not a guideline for buy or sell. The author will not be responsible for any loss, that may occur.
1 comment:
Looks like nifty will be topped out today.Nifty future Sept. now trading at 8915.
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