Larger Picture:
Here is larger picture of Nifty with the help of monthly chart. You can see that on monthly chart Nifty is taking repeated support on a trend line. This trend line traces back to March 2009. This trend line exhibits a strong support to Nifty in 8000-7900 range. On the monthly chart, last month Nifty has formed a bullish hammer. As a follow-up to this monthly hammer, Nifty is in process of creating a bullish green candle. This bullish green candle is yet to form completely. Larger trend is up.
There is a resistance to Nifty in 8500-8590 area. On this larger time frame Nifty is still not in the region which can be called as over bought. We can expect the uptrend to continue. Correction is a part of an uptrend and is also healthy for uptrend. One such correction can not be denied once Nifty reached its resistance.
Monthly chart:
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Here is larger picture of Nifty with the help of monthly chart. You can see that on monthly chart Nifty is taking repeated support on a trend line. This trend line traces back to March 2009. This trend line exhibits a strong support to Nifty in 8000-7900 range. On the monthly chart, last month Nifty has formed a bullish hammer. As a follow-up to this monthly hammer, Nifty is in process of creating a bullish green candle. This bullish green candle is yet to form completely. Larger trend is up.
There is a resistance to Nifty in 8500-8590 area. On this larger time frame Nifty is still not in the region which can be called as over bought. We can expect the uptrend to continue. Correction is a part of an uptrend and is also healthy for uptrend. One such correction can not be denied once Nifty reached its resistance.
Monthly chart:
Closer Picture:
Nifty on its Weekly chart is still not giving us symptoms which is an indication of a downside correction. However some pressure is seen, if you carefully observe daily chart, Nifty is trading in overbought zone and also has its resistance nearby. Major event of budget is schedules on 1 Feb. This event can have large impact on Nifty. Technically a fall in Nifty to its support near 8250 will be an opportunity to add to the positions, as the larger picture remains positive.
Markets usually trades nervous before important event and takes the direction on the day of the event.
The arrows on weekly chart below exhibits important areas.
A picture still closer:
On daily chart one can see that Nifty has started experiencing some pressure. Nifty is also trading in overbought zone and has negative divergence. This is an indication of a correction. However the correction may not be substantial looking at the positive picture on larger time frame. However this is definitely not the time to go long. Wait patiently for the markets to correct and then enter. If you have profits in existing positions, current time may be the right time to book it. For me 8506 and 8255 are crucial levels.
At Bonvista Equity Research we believe in simple ideas to make money in stocks. Right analysis with good money management and risk management is the key to earn profits in markets. To have look at our Premium Service visit our website Bonvista Equity Research.
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