Update for 21st February 2011

 Nifty Futures Again at the Crossroads !

• Let's start this update with some performance data. The buy signal indicated by the Momentum Signal at the Nifty level of 5455 on 14th Feb. resulted in to a maximum favourable excursion ( MFE ) of 134 points. Or in other words, the trade would have lead to to a profit of 100 to 150 points, depending up on the entry and exit opportunities.
• Now here are two quotes from the previous two updates which dealt with the resistance above and the market situation.
• "If  Nifty future breaks above the high ( 5505 ) and reaches the next higher resistance area ( 5550 to 5600 ), it may attract profit booking and even some shorts." ( Update dated 17th Feb. )
• "The market is due for a small correction, as it does not usually make gains continuously for more than six or seven days. ...The kind of one way movements being seen at present  can also turn a small reversal in to a  severe one." ( Edited quote from the Update dated 18th Feb. )
• It seems that no more explanation is required to understand the market action of Friday, as the reasons behind the sell off is all in the above two quotes.
• On Friday, markets opened higher and immediately went up, forcing even the last of the bears to cover up, and upon reaching the top end of the already indicated resistance, the sell off started. 

  Nifty Futures - Intra-day Chart  

     Nifty Futures  - Daily Chart 

Update for 18th February 2011

 A Day of Gains and Now What ?

• On Thursday, Nifty futures opened exactly at the same level where it closed on the previous day.
• The futures contract sold off from the open to test the low of the previous day on light volumes.
• The light selling probe ended at 5460, which was just above the previous day's low and also the reference level of 5450.
• The recovery from the low of 5460 was also on very light volumes. The market seemed to be completely dried up of volumes in the morning session.
• The recovery still continued very tentatively  towards the two day highs. Once the Nifty contracts broke the two day high, volumes came back to the market.
• The futures closed the the day's high of 5550 for the day.

  Nifty Futures - Intra-day Chart