Update for 1st February 2011

    Nifty Futures Bounces from Lows, But What Now ?

• The sell signal indicated by the Momentum Signal at 5630 in the current month Nifty futures on last Thursday has lead to a favourable excursion of 190 points or profits.
• As indicated in the previous post, Nifty futures bounced from the 5450 minor support area.
• In tandem with the SGX Nifty contracts, Nifty futures opened lower on Monday with a gap.
• A large gap like 60 points from the last traded price may force the market to recover and fill the gap.
• Therefore, some bouts of short covering occurred during the day. 
• The last two day's intra-day recoveries have almost the same highs at 5545.
• The level of 5550 was the starting point for the upward breakout towards the all time highs in September.

Nifty Futures - Intra-day Chart 

• Therefore, the level of 5550 may become a reference level for the purpose of intra-day analysis and trading.
• The higher resistance above 5550 is at 5630 coinciding with the 200 DMA.

Update for 31st January 2011

   Will the Downtrend Continue ?

Pointers :

• The February series Nifty futures closed at 5630 as on last Thursday, the derivative settlement day.
• On last Friday, the first day on which the Feb. Nifty contract became near month, the contract could not even reach the previous day's last traded price of 5630.
• Therefore, the Nifty contracts again made a subtle gap by not reaching the previous day's last trded price.
• These subtle gaps are normally associated with technical weakness, especially in trends and at the highs.

Nifty Futures - Intra-day Chart 

• Though the 5550 level was indicated as a minor support, Nifty future could make a bounce of only 30 points from this area. 
• However,  a bounce seen in the last hour of trading almost reached the 5550 level.
• The 200 day moving average ( DMA ) at 5630 may act as a resistance on any recoveries from now.