Examination of Today's Nifty - 03 Jun 2009

As a part of preparation for a day's trading, I always review the previous days price action. To me, previous day's chart contains a huge wealth of information.

Here is the chart for 03 June ( you can click on it for a larger view).

To begin with, notice the double top during the day at approximately 4575 reached at around 11 am and 12.30 am.This means that at least for today, there were more sellers than buyers at 4575.

The day's low was at 4480 which came at around 1.45 pm followed by some recovery. This means that there were more buyers than sellers at 4480.

The level 4480-4490 is turning out to be a battle grounds for buyers and sellers. Day before yesterday Nifty went below 4490 and bounced back from 4450.

Finally, the day ended almost flat. This makes it two consecutive days of range bound movements for Nifty between 4575 and 4450. Such a narrow range cannot last too long. Sooner or later, Nifty has to break through these levels.

Another very important thing to note is the 20, 50, 100 EMAs have almost converged. This is a situation that is poised for a break out. Whichever way Nifty breaks out, we will need to take positions in that direction.


However, it does appear that market may need a breather at this point. For tomorrow's trading, it might be a good idea to trade with negative bias and go short with 4585 level as Stop Loss. If the market does break out on the higher side, I will either step aside or go long with a Stop Loss at 4520.

Disclaimer: The above analysis is just that - my analysis. If you choose to trade on the basis of this analysis, you will be solely responsible for the outcome of the trade - profit or loss. Please keep in mind that day trading is not for the novice and there is significant risk of loss of capital in trading.