A Test of 50 DMA, A Doji Candle and A Buy Signal .. !
The Nifty futures opened with positive bias on Thursday and it almost tested the 50 DMA at 5120 by mid-day. ( This was also anticipated in the last post ). However, as it could not sustain the higher levels, it traded lower to reach 5165 and finally closed at 5183.20. Nifty future's trading on Thursday formed a doji candle, which indicates indecision or reversal. Meanwhile, the Momentum Signal returned a buy on the basis of the closing values of the Nifty futures and the BSE Sensex. The outcome of the buy signal depends on the cues from the international markets as the trading seems to be bit neutral and directionless at present. As indicated in the previous posts, the futures may get support from the 100 DMA at 5120 and also from the weekly low of 5080.
Nifty Futures - Daily Chart
World Markets
Most Asian markets closed with gains on Thursday. In Europe too, the FTSE and the DAX closed with gains of 0.93 % and 1.11 % respectively. The DAX index seems to be the best performer, may be on back of improved competitiveness of German companies due to the devaluation of the Euro currency. The Euro USD pair was trading at 1.2567 which is very near to the recent lows. However the French CAC closed with some negligible losses. The US market indices were trading with negligible losses of 0.1 to .04 % at the time of this post at 11.30 PM IST.
The Updated Momentum Signal Spreadsheet
The updated spreadsheet showing the Momentum Signal as on the close of 13th May 2010, is given below.
Momentum Signal has returned a value of +50 in respect of the Nifty futures but it has returned a neutral value in respect of the Nifty index. However, the close value of BSE Sensex returned a Momentum Signal value of +50.
Projected Momentum Signal Close Values
The projected levels of closing values corresponding to the momentum shift / neutrality / continuation as on the close of trading on 14th May, 2010 are given in the table below. The table also include the projected closing values of BSE Sensex corresponding to the momentum shift / neutrality / continuation signals.
Please click on the table to enlarge. For more info on the above table, please click here.
The absolute stop loss for the long position signaled on Thursday remains 5080 which is the weekly low. This stop is approximately 2 % lower than the entry price of 5183.
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