Nifty View for 18.09.2012

Today the reforms which were announced earlier showed their effect on the spot nifty and it opened with a fourth gap up at 5631.75 above the earlier swing high of 5630 which can be termed as a breakout technically. Spot nifty made a high and low of 5652.20 and 5585.15 respectively to close the day at 5610.00. It has left another gap of 8 points on the chart. The close above 5600 will be psychologically positive for the bulls. Now lets look at the big picture on charts of nifty future above. Nifty is near the 61.8 % retracement level from the top of 6338 to bottom of 4531. Also Bollinger bands show a resistance at the top of the band. The regression channels drawn on the chart show the earlier moves with the current which nearing the top of the channel. The red trend line drawn shows the probable resistance at the top. MACD is in positive zone but not convincing yet for a reversal and needs to be watched. Still no signs of any reversals are observed on charts to confirm it. So longs should be hold with some caution as mentioned above. The small gap of today if closed then nifty could correct more. So use this gap to hold longs. Above this level of 61.8 %  retracement the next level shown on chart is 80.9% which is at  5992 and intermediate resistance at 5728-5750.  The 78.6 % level is at 5945 not shown on charts. Weekly close of 5577.65 can be used as stop loss for positional longs. Intraday players can look at the levels on spot nifty given below to trade on Tuesday.

No trade between 5591 and 5629(To avoid whipsaws)

Buy above 5629 sl of 5609

targets 5647-5666(add positions, breakout on the upside),

5685-5704-5722-5742-5761.

Sell below 5591  sl of 5609

targets 5573-5554(add positions,breakout on the downside)

5535-5517-5498-5479-5461.

Happy Trading !!!