Saturday, July 18, 2009

Is Trend Reversal Imminent?

Volatility Revisited

A key feature of the market in last 15 days has been 'Volatility'. Stock markets at first developed a narrow range of Nifty 4200-4650 prior to budget. Post budget, as markets got a major event to react on, it breached the range on the downside taking cues from the FM's announcement or rather say lack of announcement. A crucial support got breached at Nifty 4200 levels to test lower levels until 3920 in next few sessions.

Did You Buy in Nifty 3900-3950 Zone?

The idea was to fill up the gap left open since election results i.e., Nifty 3650-4350. The gap got filled only partially up to Nifty 3900 levels. This blog had clearly hinted in my previous posting that the targeted gap need not necessarily be filled at this very attempt. An initial target of Nifty 3800-3850 was clearly spelled out. Keeping in lieu of this target, investors were suggested to start accumulating stocks in between 3900-3950 range as a start-up call.

Need of the Hour: Consolidation

Next few days, markets jumped up as vigorously as it had slumped during Nifty fall from 4250 to 3900. As mentioned in the previous post, a trend reversal is possible above Nifty 4400. Now, we're quite near to those levels and we till need to see whether Nifty 4400 is being crossed over and sustained above that. By ensuring sustenance, we'll understand that the break-out above 4400 is not a false one.

Traders can Buy on Dips, Investors can Hold on

The recently visited bearish range at Nifty 3900-4250 is fully engulfed, as Nifty has moved above 4250 with a weekly closing above the bearish range. The rise witnessed from the lows of 3900 was a vertical rise executed in only 4 sessions. This may call for some consolidation and range bound movement preferably in narrow range of Nifty 4250-4450 in short-term horizon or a broader range of Nifty 4000-4650 over medium term horizon. Keeping these ranges in view, traders can buy stocks at lower levels on dips or nearer to their respective support zones. Investors can hold on to their long positions unless there is re-emergence of any sort of bearish break down.

Leave Your Comments

Before concluding this post, let me pose a 'Thinker' for the readers. Readers can use their free time to ponder upon following aspect on the markets: The post-election gap on the charts at Nifty 3650-4350 has been partially filled up to 3900. The remaining gap of 3650-3900 is still pending to be filled in future. Will it be filled in near-term or will it be revisited upon in medium-term? Also, is it possible that markets can completely get away without filling this gap? The gap is still a substantial 250 point range. You can as well leave your views in the 'Comments' section.

Disclaimer: All data, content and/or reports posted by Viral Rajnikant Dholakia on this site are only for information and educational purpose of visitor/readers of this blog. It does not constitute to be a recommendation/offer/advice to buy or sell assets/securities in any form. Individuals/organizations are requested to take an informed call by consulting their Financial Advisor before acting on any matter/data published on this blog. This blog does not warrant of any kind of accuracy, adequacy and completeness of data, ideas or thoughts published in it. This site and Viral Rajnikant Dholakia assumes no responsibility or liability or loss or damage of any kind/nature for your trading and investment decisions and its consequent results.

No comments: