Daily_Nifty_VP's View-14/09/12

LEADER POST for Friday (14/09/12)

1.         The supports are at about 5428/26, 5421, 5373 and 5362. Resistances are at about 5438/41, 5447, 5466 and 5471/75. The next higher reference level is 5500. Three +WWs give about 5442/47, 5481 and 5508 (+WWs with much higher targets are not mentioned as of now). Two likely -WWs give about 5392 and 5332 (-WWs with much lower levels are not mentioned presently). An apparent rising wedge gives about 5334 in case of a BD. The top of this wedge is about 5466. A flag gives 5447 unless killed below 5427. A -ve divergence seems to be developing on daily chart of nifty.

Once again nifty could neither close above 5454NF, an important number as per one number theory, nor above the psychological level of 5450 spot. The news about fuel price hike in India as well as welcome news from FOMC in US are likely to give further boost to market. However, caution is advised in trading since a fall from present level or higher level is not ruled. Thursday's candle is once again an imperfect evening Doji star, which gives bearish tone. Only a gap up opening followed by a big green candle on Friday can negate it. Liquidity continues to remain high.

2.         Pre-open high/low at 5528.40/5258.50 and close at 5528.35. The 10tf candle is a Marubuzo and may indicate a mildly -ve nifty after the huge gap up. This is the fifth time pre-open high is over 5500 in last 2 months. (5536/5578/5737/5645/5528).

3.         AS PER 9.30 STRATEGY, BUY BELOW 5531NF TARGET 5571.50/5592 SL 5501.

4.         Targets of all the three +WWs met. I wish I had posted +WWs with higher levels also. Flag target also met.

5.         First target met.

6.         Second target of 9.30 strategy (also met). Unfortunately buy level never came.

7.         Once again, nifty opened up with a huge gap taking cue from announcement of QE3 by FED in US and the resultant upbeat global markets. It continued to rise after opening, breaking the previous high of about 5500 made in March '12 and making a new high of about 5586 before finally closing +ve and well above previous close. In the process, all the targets of three +WWs and the flag mentioned in the first post were met. Also, met were targets of 9.30 strategy though nifty never came to levels to enable an entry in trade.

The only time in the last three years that nifty closed with such a huge gap was on 28th Oct '11 after which market had reacted sharply. However, nifty was in a downtrend at that time while now it is in an uptrend.

The intraday chart of nifty spot values with 5 min candles is shown below.