For the latest on Nifty I have considered three most important factors as follows which will give a clue where Nifty will go in the coming time.
By using Fan principle trendlines, we can say that trend has definitely changed. When Nifty rallied & started coming back, it has taken support at 1st trendline but after some time it has finally broke this trendline & tested 2nd trendline. By seeing this, we can assume that this 1st trendline will be next resistance & 2nd trendline will be support. Fan principle says until 3rd trendline, no clear cut downtrend continues.
1. FAN PRINCIPLE (Trendlines)
2. FIBONACCI RETRACEMENT
We joined from where Nifty began its rally i.e. 4315 & 5630 & draw Fibonacci retracement. One can see that Nifty is at its previous rally's 38.2% retracement now; it needs to stay above this level to resume its rally to upward direction. Before that I want tell u that these retracements suggests the support & resistance for next move.
3. Moving Averages.
Moving averages is the most popular indicator among traders & it is very easy to find. Here I’m showing chart with 50 & 200 Exponential Moving averages. Many traders forecast their trading strategies by using EMA & there try different EMA like 20, 40, 50, 100, 200 etc. I believe that these two moving averages (50 & 200) are very important for medium to long term trading strategies.
Nifty is trading near 50 & 200 EMA now & I feel we will see new recent highs like 5900 if Nifty manages to stay above 5200 & built up some buying near this level.
By reading F&O data, we observe open interest increased significantly & bulls bears both are equally strong for now. Next coming few trading sessions will conform who will take control & define next directional move. So it is very clear that Nifty is at very crucial point & we must wait for 2-3 days to decide our trading strategy. (For safer side we can go long above 5300 or long at this level with strict stop loss below 5200 on closing basis.
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