Nifty Technical Outlook for 20th May, 13

Nifty as on 17 May’13 – 6187.30

Nifty as on 17 May’13 – 6187.30

Nifty as on 17 May’13 – 6187.30 (+80.05)

Nifty as on 17 May’13 – 6187.30 (+80.05)

From above charts of Nifty, few things I would like to high light here.

  • As we already know that Bank Nifty has not only tested but settled above its lifetime high, whereas Nifty still laggard. From Friday’s closing, Nifty has to run from 151.20 points to retest the swing high of 6338.50 posted on 5 Nov’10.  As such it is not very big target for Nifty, but sometimes even you can lose match at last ball, you never know. 
  • On weekly chart, there is clear Negative Divergence between Price and RSI (14), whereas on daily chart RSI has turned flat, while price moving higher.  From past observation it seems that Nifty  has show such traits, where on daily chart it turns flat, while prices continued to move higher.
  • At this point in time my concern is not, whether Nifty will retest its high or not. I think, its time to think that Nifty can sustain at higher level and continue with bullish momentum and make New all time highs or not.
  • Slightly out of this topic – my favorite traders is talking about New Bull Market is setting stage, but, even though I am its big fan, and I know whatever he says, generally validated by market. But this time I am not buying his idea, I am not convinced that Nifty will sustain at higher level and enters into new Bull Market.
    • Main reason behind my ideology is that, some heavy weights are still significantly below their all time highs, while some are consolidating from a long time, and now whether they move 4-5% broadly it will not make major sense, as they are discounted scrips by market.
    • Momentum is not showing positive signs to support such move.

What I expect is, may be Nifty will move higher to retest the high, and may be move slightly higher above that level and turn lower on grounds of profit booking. May move further lower in coming 2-3 months, and after which can take support at lower levels and move higher again. But for time being I can think of only 2-3 months not beyond that, and it is only technical observation, no fundamentals are considered in this. Probably, I may prove wrong in coming months, I don’t know. With that, let me put very clear disclaimer, I am by no mean I seeing and turnaround and market to turn in bearish mode. As long as Nifty is holding above 5900 levels, I see any pullback as a buying opportunity, and below which I will revise my outlook.

Now, you must be thinking what should be strategy at this point in time?

Till date there is no reversal signal, so stay with a trend, which signifies to stay long on market with cautious approach. For intraday perspective initiate long above 6200 with stop loss below 6150, and keep trailing your stop loss.  Below 6085 Nifty can dip further towards 5970.

For high probability trade, keep visiting Way2Profits.

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