While analyzing the Daily charts of “NIFTY”, we found that the
Nifty is in “Bull Market”
We suggest a trader to trade with Bullish bias since we
believe technically Nifty is very sound. Immediate Stoploss would be a closing
below the recent swing low of 8670 whereas immediate target would be 9450.
~ A bull trend is identified by a series of rallies where
each rally exceeds the highest point of the previous rally. The decline between
rallies ends above the lowest point of the previous decline. As we can see from
the chart below Nifty has been making Higher High’s and Higher Low’s. Each
successive green arrow has been higher than the previous ones similarly each
successive red arrow was higher than the previous ones.
~ Nifty is in a strong uptrend. An uptrend line has a
positive slope and is formed by connecting two
or more low points. The second low must be higher than the first for
the line to have a positive slope. Uptrend lines act as support and indicate
that net-demand (demand less supply) is increasing even as the price rises. A
rising price combined with increasing demand is very bullish, and shows a
strong determination on the part of the buyers. As long as prices remain above
the trend line, the uptrend is considered solid and intact. The RSI of the
Nifty is also in uptrend and is in sync with price which gives us further
supportive Technical Analysis evidence.
~ Nifty is doing well as far as
candlesticks are concerned. Candlesticks provide unique visual cues that make
reading price action easier. Trading with Japanese Candle Charts allow
speculators to better comprehend market sentiment. Traders who use candlesticks
may more quickly identify different types of price action that tend to predict
reversals or continuations in trends – one of the most difficult aspects of
trading. Furthermore, combined with other technical analysis tools, candlestick
pattern analysis can be a very useful way to select entry and exit points. We
have seen “Bullish Kicker” Formation
on the charts. The Bullish Kicker Candlestick Chart pattern is one of the most
powerful candlestick reversal patterns. Its reliability is very high when it is
formed at a possible support or formed in an oversold area. This pattern consists
of 2 candlesticks or one can say it takes two days for this pattern to form. Day
one candlestick is the continuation of the downtrend therefore bearish in
nature and it has no significance by its own formed in a downtrend. On Day two
a bullish candlestick is formed, which opens at the same open of the previous
day (or a gap open, and then heads in the opposite direction of the Day 1
candle. Bullish Kicker
Candlestick Pattern is an indication of massive change in the sentiments of the
market/ investors and is basically based on sudden surprise news. The
formation of bigger bullish candle size then the day 1 candle, further confirms
this pattern reliability.
~ Nifty Future’s November High was 8668 whereas Nifty Future’s February Low
was 8671 which shows Nifty hasn’t moved anywhere in last 3 months. Nifty traded choppy in last 3 months without
adding any points which we believe represents “Time-wise” consolidation. Given
the larger uptrend in the market we believe this consolidation may be over soon
and we may again see a new swing high.
~ Moreover we have seen Smart Index management in such a way that either of
the heavyweights comes to rescue of the Nifty whenever it is required to jack
it up. We don’t know whether it’s been done deliberately or is happening by
itself but what we know is it is happening for sure. Basically Nifty is a
component of 50 stocks. Top 5 stocks in the Nifty constituents are ITC,
Infosys, HDFC, HDFC Bank and ICICI Bank. The combined weight of these 5 stocks
are 35% which means the movement of these stocks play a very crucial role in
determining the overall direction of the Nifty.
We have seen whenever there is significant correction in one of these
heavyweights, other heavyweight comes to its rescue. Recent example would include
the fall in ICIC Bank from 393 levels to 316 levels roughly 20% correction
along with simultaneous rise in ITC from 348 levels to above 402 levels
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