Markets for 6th aug

REview of market of 6th August

Well the hype of wednesdays break out was short lived on thursday, as nifty after the opening in first 10 minutes crossed wednesdays high of 5481 to make a face saving high of 5487 and continued to remain in a mildly slopping flat with a low of 5466 till 2 pm, when another wild goose chase by the overfed bulls met with heavy barrage of shorts by the bears from around 5480 levels keeping their must quit point just above the days high of 5487.the ruthless shorting was so vigorous that it looked as if all the bulls had been converted into bullocks. nifty spot in a matter of minutes made a low of 5443 to close near the lowest point of the day at 5447 & after the close bulls started looking skywards with the mouth open towards dow to drop some nectar on thursday night. well, time only will say whether it will be dow dropping some nectar or the flying vultures releasing liquid from the sky.

Failure to cross 5500 will certainly make nifty to fall further down towards 5400 levels on friday. the logical reason being last week nifty had made a high of 5466 and had closed around 100 points lower at 5367. so expecting a much higher closing of nifty above highs of last week at 5466 is highly unlikely & secondly a much higher closing above the last weeks closing of 5367 will not be relished well by the operators who would make their utmost efforts to pull down nifty towards 5400 spot levels.

For fridays trading, the only consolation may be that nifty had closed near the lowest point of the day at 5447 on thursday and a solid retracement like the other low closing days may see nifty recover initially. however with a most likely weak overnight dow, followed by blindly following asian markets, may influence the few minutes of initial opening to see some more fall in nifty before the limping bulls wake up & try to chase away the overeaten bears.

If one has a closer look at the hourly chart above, one will notice that spot nifty has initial support around 5430 to 5425 levels a decisive breach of which may see a stone like fall in nifty spot towards 2nd august gap starting from 5404 levels. a breach of this critical 5404 may strengthen bears to dictate nifty to enter the gap zone towards 5380 in a day or two. however if bulls are determined not to give an inch south of 5440 or 5430, then there is every possibility of nifty rising to retest thursdays highs of 5487 or at least nearer to it, only to see a repeat of turbo shorting by the bears towards end of the day to see nifty close lower to face on monday morning the brunt of dows friday nights knock out punch which dow operators had purposefully skipped on last friday night.

For intraday trading on friday, in case of initial weakness, if nifty spot manages to sustain above 5430 then one may go long with a tight quit point below spot level of 5425. similarly in case bulls manage to take nifty towards thursdays highs of 5485+ ( which is highly unlikely), then one may plan to boldly short with quit point above spot 5500 or hold to quit at the end. a rise of spot nifty even above 5464 may be a great achievement for the bulls on friday, as in that case short covering by the bears above 5464 may take nifty towards 5474 followed by 5480 or even nearer to 5500.


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