Detailed Nifty Analysis 5 Aug 10

Flashback, First.On 11/7/10, we sent a file to over 10000 people via different networks and

lists. The file can be still downloaded at http://activetrades.in/downloads/Nifty110710.pps

In the last presentation…We advised at 5360 that above 5380, tgt 5500.

Nifty crossed 5380 and then came 5483. Short of 5500 only by 17 points.

Enjoyed?

Cup & Handle served a nice, tasty and profitable treat.

Nifty Long Term Chart

Nifty Long Term Chart: As it looks clear from the chart, the long term bullishness of Indian markets is still very much intact. The earlier supports are now resistances. Stiff resistances.

See the effect of it

As and when R1 brokeNifty went to R2.

Meaning 6000 again??Conclusion from the long term chart basic analysis:1) The long term bullishness is still intact.2) The R2 4400 is now broken, though insignificantly, leading way towards R3.3) The R3 stands at 6000+

Observations:1)Major resistance by parallel channel indicated by bold red at 5555.2)Minor resistance by rising wedge at 5555.3)Short term support at 54504)Minor support at 54005)Major support at 49006)Longer consolidation periods indicated by orange.

Want to see the chart again? CLICK HERE.

Summing it up

You might have noticed that we have Long term slide (Slide number 5) in every slide. Why? Because the long term pattern is unaffected and the long term targets remain intact.

Inflation, Food inflation, flat corporate numbers, flattish growth numbers… etc all are here. But still markets are bullish. The fierce rally happens (usually) happens only when the good news is actually over, and there is a euphoria over nothing. If you can’t justify somebody, confuse him. That’s what is the mantra of “player” (read FII). It has been buying crazy since months and must be feeling the need to offload. Who will buy? And that too in this environment?

At every 20-30 points, in 5400 range, retail traders get memories of 5400-5100 range and go short and trapped. Markets have given an open clue to everybody that it will goto

Summing it up

5400 and then fall to 5100. But an open secret is no secret, and market moves more on secrets and surprises than hard facts. Simply because if everybody knows something, then from where will the profit of these everybody come? 10% people make 90% of the money.

Technically, there are multiple resistances @ 5555. A decisive breakout will mean long awaited euphoria to kick in, giving a stupendous rally. However a failure of the same would mean atleast some decent profit booking. There is a resistance at 5485 also which needs be taken to see 5555 and above. On the other side, supports 5450, 5401 are significantly strong.

We advised 5500 at 5360 almost 1 month ago. Market moved 100 points in 1 month. This is unusually high and extra ordinary consolidation which has affected a lot of traders.

What to do?

Assuming you are long for our target 5500, you can book it partially near 5485 and fully near 5555. Then go short with stop of 5565 and book it near to 5450. If and when markets move across 5555, go long for a target of atleast 5800. On the other hand, a hedged position in midcaps with short largecaps seems to be a fairly good idea at this point.

Note that there will be updates to these levels and shall be delivered via:

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Summarizing

Summarizing, resistances 5485, 5555. Supports 5450 5401. The color is green. Could be red if 5555 does not break.

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See how precisely we advised, and we even sketched the forward chart…

And see the future movements indicated by grey and red. You can read the complete report at the Nifty View page.

The actual chart… It is an old chart. Now Nifty is around 4600+