Update for 6th December 2010

 

   Two Days of Indecisive Trading and What Now !  

As part of the scenario analysis given in the last Friday's post, it was stated that if the Nifty future was unable to cross the previous day's high, it may try to revisit the 5860 support or even lower levels. However, this scenario was expected only in the absence of positive international cues. In spite of the western markets continuing their uptrend, Nifty futures opened flat on last Friday and enacted a part of the scenario by trading below the previous day's low. However, the positive international cues prevented the Nifty future and the index heavy weights from  losing much on Friday.  The advance decline ratio showed a very negative picture on Friday because of wide spread losses in many stocks. The market also lacked volumes on Thursday and Friday, may be because of the lack of enthusiasm ( ? ) to trade at the present levels. 

 

Nifty Futures - Intra-day Chart        

The intra-day chart above shows the lackluster trading  seen on last Friday. The upper horizontal line show the 6030 resistance area and the lower, the low of last Thursday.

Update for 3rd December 2010

   Nifty Future Ends Higher, But Ends Flat Intra-day !  

Nifty future was expected to open higher on Thursday on the back of the fresh buy signals in the contract and the BSE Sensex  and also because of the overnight rally in the European and US stock markets. The last post indicated that the immediate higher resistance above the market is at 6030 level. Therefore, Nifty future opened higher but remained just below this level not only at the open but also for most part of the trading day. As the futures found it difficult to cross the resistance, especially after a fast and significant rally in the previous two trading days, it tried to test the previous day's last trade or at least the previous day's high. This test ended exactly at the previous day's high at 5991. Since the trading was confined to a tight range, the futures tried to test the highs as well as the 6030 resistance at the fag end of the trading day. It partially succeeded in breaking the resistance but  closed below the resistance at 6026. Now, lets check the intraday chart of the Nifty futures to find why this might have happened and also to understand an intraday day trading technique which could be used in very narrow ranged markets.

Nifty Futures - Intra-day Chart