Trading plan for this week (21-Nov-11 to 25-Nov-11)

In weekly analysis of 14^th Nov’11 my observation was, ”Nifty closed below 5 WEMA and 5 Weekly Moving Average touched 20 Weekly Moving Average. A convincing cross may give hope to bulls and NIFTY may recover some loosing ground. Failing to cross may cause fast fall. But NIFTY closed well below DLEMA (5200) and WHEMA (5280). These data are supporting bears now.” Nifty got down by almost 263 points or 5% in the week ended on 18^th Nov’11 as bears were into the action for the whole week. Although there was some intraday bounce but those bounces were used as selling opportunity by bears. On Friday Nifty took support at 4838 and closed, above Monday’s Pivot of 4885, at 4905.

Daily Chart of NFTY

Nifty Ahead: For several days Nifty is trading in oversold zone and Friday’s closing at lower band of Bollinger Band makes it good candidate for buying at lower level. It may bounce and bulls may try to find some ground. Friday’s candle is a Doji with long tail which signal bullish reversal. But is nifty out of danger now? I think no. Weekly candle has shown no reversal pattern and there is a bearish cross appearing in Weekly MACD; although in daily chart, bullish cross visible in stochastic. This week is expiry week. Keeping all these in consideration it looks like Nifty will be highly volatile this week and there is upmove possibility in early part of the week which can be used as levels to sell by the bears. In a nutshell, both sides trading opportunity can be seen in Nifty.

Possible Trades : Buy Nifty above 4910 with SL at 4870 for target of 4970-5010. Staying above 5035 can target 5130-5180. Positional Long can be taken above 5035 with strict SL for the target of 5130-5180.

Downside movement seems limited in first two days of the week but any rally can be used as selling opportunity until there appears any sign of reversal. 4700 (-3% whipsaw) is strong support and highly probable also.

Trading levels, targets etc should be adjusted according to intraday trading setup.

N.B: All the above mentioned prices are based on Nifty spot Price.