Nifty view for the last week of Feb 2014

The Nifty Index had a 'Bullish' week with a low of 6038.30 and a high of 6160.35 and closing near the highs at 6155.45.

In our last post, we had mentioned the 'Bullish Harami' on 14th Feb might stall the down move and advised booking part of Shorts and / or tightening Stop on the Shorts. The down move not only stalled but we had a small reversal of sorts. Having said that, the prediction of the next move is very tough.

If the Bullish momentum of the last week is sustained the Nifty has 6265 and 6355 as targets. But Nifty is running into resistances at 6158 - 6161, 6189-6195 and 6200. If the slow reversal since the low of 5933.30 (4th Feb) till 6160.35 can be considered as retracement of the down move from 6355 (and 6415 too) and if the Index reverses below from here it can decline to 6050, 5950 - 5933.

Nifty view for 17 - 21 Feb 2014 weeek

The Nifty Index stayed within our first Resistance 6120 (week high 6106.60) and first Support 5970 (week low 5984.60) indicated on 9th Feb - meaning Nifty was range bound for the week.

Friday's price action ensured a 'Bullish Harami' candlestick on the daily chart. A Bullish Harami suggests a stall in the preceding trend - which is down now. It is not necessarily a trend reversal candle but a signal to the Bears to close at least part of Shorts or Tighten (or lower) Stop loss. The weekly candle is more of a 'Spinning Top' indicating indecision on the part of market participants.

The Trend though is still down but it lacking momentum on the downside. The supports and resistances remain the same for the coming week too.

Supports are seen at 5970, 5877 & 5800. Resistances at 6120, 6180, 6200 - 6220.

Nifty view for the 10 - 14 Feb week

Last week our view played out perfect with the Index declining below 200 DMA and holding above the Fibonacci retracement support of 5920. Even the relief rally could not extend till the first resistance indicated at 6102.

But the index (Nifty) has formed a Takuri (Advanced Hammer) on the weekly Candlestick charts. This is a Strong Bullish reversal pattern when seen in a downtrend. The Japanese word Takuri means 'to test the depth of the water' before taking the plunge. So having tested the depth of water (near bottom) and its ability to hold and stay afloat (push up the prices on 4days of the last week to near high closing), the Bulls will give all their might to push up the Index.

But the Wave studies give a different picture. The downtrend is still intact and further fall is expected if 6200 - 6220 are not taken out on the upside next week.

The supports and resistances remain almost the same for the coming week.

Resistances are at 6120, 6180, 6200 - 6220. Supports are at 5970, 5877 and 5800.

Index view for 5th Feb

Nifty gaped down (on 4th) well below 5970 and hit a low of 5933. It held above the Fibonacci support of 5920 and made a strong dash to 6000 and closed above it at 6009.5.

As indicated on Monday (3rd Feb) break of 200 DMA is not a one day affair. The relief rally is very normal and the short term trend is still down. The rally can continue for a day or two till 6102 and 6160, above which it faces the 6189 ceiling of the big gap formed on 27th Jan which is a stiff resistance.

The extent of relief reduces the downward target. We still believe the next 'wave' of selling has the strength to take the Index to 5877 - 5850 as indicated earlier.

Our Nifty Futures Trades for Feb 2014

3rd Feb, Monday.

Initiated Short on NF at 6095 and booked part at 6072. Trailing Stop at 6070 hit on the second lot after a low of 6055. Ended trading for the day. Our sms server failed and we were able to send the Short trade only to a few who come on yahoo messenger.

Our score for the day: + 48 points (2 lots)
Our score for the Feb series: + 4 points

Jan 31 (Friday)

Having indicated on 30th Jan, that 6100 - 6120 on the Index is a strong resistance band, we exactly did the opposite of initiating a long trade on Nifty Futures at 6121 (near 6095 on spot) and were stopped out at 6098.7 (NF). By the time we realized range bound trade for the index, the up move from 6100 to 6120 was over. 30 point range day.

Our score: - 44 points (on 2 lots of NF traded).

Index view for the First week of Feb 2014

The Nifty index as indicated on 26th Jan is sliding towards 5972. From 10th Oct 2013 the index is moving in a broad range between 5980 - 6360. Now Nifty is at the lower end of the range. It has critical support at 5972 (previous swing low) also the 200 DMA (Day Moving Average) at 5973. Below that 5920 is Fibonacci support. Decline to 5970 and 5920 is very much a possibility. 5877 - 5850 is the next support.

Having said that, the break of 200 DMA is not a One day affair. We need at least two weekly closing below the 200 DMA to confirm its break.

On the upside any relief rally will face resistance at 6102, 6160, 6190 - 6200 and 6220. It is hard to imagine any pullback above 6220 at least for the week (3rd Feb -7th Feb).