Update for 8th December 2010

  
  The Break of Low Also Fails and Now What ?

In the previous post it was opined that Nifty future may continue with the downward movement seen on late Monday and try to test the 5940 support below. However, it was also mentioned that even if the futures contracts trades down to the 5940 levels, it might still be in the positive momentum area. As expected the futures traded down on Tuesday after opening slightly higher at 6005. However, the expected test of 5940 ended at a higher point at 5956, on the back of the strength in the Reliance stock and other commodities stocks. However, the market breadth remained negative with widespread losses in the banking, mid and small cap sectors. As the Nifty future is still trading in the positive momentum area, it recovered at the second half of the trading session.

Nifty Futures - Intra-day Chart     

Update for 7th December 2010

   A Breakout, It's Failure and What Next ?

It's been proven again that support and resistances can be found out only by keen observation of the market action and not by applying any simple mathematical formulas as advised many others. It was being indicated on this site that Nifty future has resistances at 6030 and 6090 levels for the past three or four trading days. Now, please check out what happened in trading in the last three days. Nifty futures traded below the indicated resistance of 6030 for most of last Thursday and Friday and the daily highs were very near to 6030. And on Monday, Nifty futures broke out above the 6030 level and went straight to the next resistance of 6090 and recorded a high of 6094. The buy signal originated by the Momentum Signal trading system in the Nifty futures at the 5982 level as on 1st December 2010 achieved a maximum favorable excursion of 110 points. Or put in simple English, the long  position entered at 5982 could have been sold at the 5090 resistance level leading to clear profit of 100 Nifty points.  

Nifty Futures - Intra-day Chart