Nifty Weekly View 21.11.2011

This Friday has been kind to us with a weekly close above 4900 level. The weekly support proved very strong and was held for the day. Some relief rally is expected on Nifty keeping the expiry in mind. But the momentum of the fall is showing down direction. As shown in the chart the weekly support proved vital and the relief rally is to be believed above 4933 on Monday. Any shorts covered on Fridays can be initiated again below the stop loss of 4870 level. Weekly loss of 400 points has created some panic in the minds of traders. But this was to be expected below the 5160 level the low of last week.Also after making an high of 5400 and low of 5252 we retraced up to 5352 an lower high.So break of 5252(higher low) was clear indication to short by Dow theory signal with a suitable stop loss.

A small personal observation I always have felt 10.10.2010 high was the actual high on Nifty and the next move was Bull Trap seeing the ADX  and Stochastic Indicators.(Watch the Vertical red Line)

On the ADX indicator we can see the momentum divergence. The Nifty price rising and the yellow line momentum has a declining slope. Also currently the green line(+DI) is below the red line(-DI) stating still we are not out of woods..The ADX is an excellent indicator if observed minutely. Watch all the moves on the upside from the start of the fall on Nifty from Nov 2010 has not been supported on weekly charts. Positional  traders can watch this for some clues.

Now for weekly close of 4921 we resistances of 4970-5036-5075 and 5141. It will be very volatile move with some wild ups and down in this expiry week. Above 4933 we have to watch 4956 above which we are open to the given targets. Also above 5141(which i doubt seeing the ride in Dollar against the Rupee) if we get there the levels to be watch are 5166-5212 and 5238.Also above 5252 we open for challenging the recent high of 5400.If we consider bottoms made we two higher bottoms made yet from the low of 4720 till bottom of 18.09.2011 and yesterday(if considered) we are yet in uptrend.We need to be cautious here as we are bottom fishing but within striking distance of breaking earlier bottoms.

Some info for those interested in learning about Gann Theory, I would request them to join Yahoo Group http://finance.groups.yahoo.com/group/Time-Price-Research-I/  

In all there are 5 groups and they free and open to all. It is a treasure of knowledge available freely with regular interaction among its members but you need to devout some time to improve your trading.

Happy Trading!