Trading Plan of 17-Nov-11

On 16-Nov-11, NIFTY opened gap-down just below 5060 and took support near 61.8% (4784) retracement level of up-move from 4728 to 5399. In last hour violent move seen on both side but 61.8% retracement level did not breached and closed just above day’s POC at 5030.

Nifty ahead: Now important question comes to my mind have we reached short term bottom in NIFTY? Or more downward move pending?

Some of bearish observation:

1. Although indicators are highly oversold, yet there is no reversal pattern seen on Daily NIFTY chart.

2. It is trading below 50 SMA (5069), an attempt to close over that level in the last hour failed today.

3. There is no +ve divergence appeared in daily chart.

Some bullish observation:

1. Stochastic is in oversold region and bullish cross is appearing on it

2. NIFTY has reversed after touching lower Bollinger Band.

But these are not very convincing clue to reversal. So we have to wait for more clue for confirmation.

Overall impression: It is too early to say that we have reached short term bottom of nifty as the supporting evidences are weak but the possibility can not be ruled out. It is better to remain with trend but cautiously as indicators are suffocating at oversold zone. Until we get reversal confirmation short at high is the mantra.

Trade: Today we got opportunity to close our positional short at lower level as ORB was down. Intraday basis we can take long position at lower level and near support. Buy Nifty near 4985-4990 with SL 4960 Target 5058, 5075, 5125-5140. We can think of positional long only above 5140 with very strict SL which can be followed with strict TSL on favourable movement. If ORB is on upper side but Nifty does not sustain over 5140 then short can be taken from that level with strict SL or if ORB is on lower side then short can be taken below 4960 with SL of 4995 for target of 4905, 4875.

Wish you all Happy Trading!!