NIFTY in 'Grey Zone'

NIFTY Daily Chart Technical Analysis

(Each candlestick represents one daily of stock market activity)

On Aug 23, I posted that NIFTY is expected to rise above 5575.  The resistance is near 5871.  Currently, the NIFTY is into this zone.  This rise is primarily due to the bank rate revision as well as approval of higher FDI in various important sectors of Indian economy.  However, it was as if the candlestick chart aided by some Fibonacci tracing and momentum indicators, was showing an expectation of rise above 5575 much before the govt. declared policy changes.  Somehow, as if, the chart knew!

Today, we can see that NIFTY saw heavy trading and a small fall during the day, indicating that long positions were being liquidated in large numbers.  This, couple with a previous resistance at the same level, could mean that the market might see some more horizontal movement or further fall from this level tomorrow.

Also, two sudden gap ups with increased trading could be some sort of a 'bear trap' - the jump before the fall.  Avoid getting too excited at the moment about the index jumps.

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NIFTY Daily Chart Technical Analysis

Could NIFTY Rise Further?

NIFTY Monthly Chart Technical Analysis
(Each candlestick represents one month of movement)

NIFTY seems to be consolidating over the past few months, moving within a set range horizontally.

The momentum stochastics is showing a cup formation since Aug 2010, and could to cross above the 80% line.

It seems that NIFTY will rise into the gray zone, between 5575 and 5871.  I am calling this the gray zone as one NIFTY reaches here, we would have to study the market very closely to watch out for any signals for the market to move upwards or downwards.  Until then the market should seemingly continue in consolidation mode.


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NIFTY Monthly Chart Technical Analysis