Update for 12th July 2011

The Reversal Leading to a Correction ?

As on yesterday's close, the Ultimate Momentum Signal closed in the neutral territory. The last buy signal was given by the system on 27th June, 2011 at a Nifty future level of 5537. This buy signal lead to maximum favorable excursion ( MFE ) or maximum profit opportunity of 223 Nifty points. 

Meanwhile, as envisaged in all the three previous posts, Nifty future has returned to the lower support area of 5500 to 5550 level as a consequence of it's failure to break above the 5750 - 5760 resistance. Now the important question is whether the correction would continue or not. Irrespective of the outcome, the Momentum Signal seems to be poised to give a sell signal as on today's close unless the market makes a strong recovery intraday. In case the correction continues after some trials to fill the gap between yesterday's and  today's trading ranges, the next support would be at the 5350 - 5400 levels where the lower boundary of the old trading channel is situated at present.

Nifty Futures - Daily Chart    

Update for 11th July 2011

 

     A Short Term Reversal in the Making ?

After the last Thursday's phenomenal rally,  Nifty futures opened almost exactly at the 200 day moving average ( 200 DMA ) and thereafter started to slip slowly on Friday. The slow drift accelerated in the afternoon session in to a mini sell off. Nifty futures and the underlying index closed almost at the day's lows. Friday's fall has not only reversed most of the gains achieved on Thursday but also has lead to the formation of a Dark Cloud Cover model pattern in the daily chart. This pattern can be associated with short term reversals, especially, if the open is near or above a resistance. As the open was at the significant resistance of 200 DMA and the falling trend line, this pattern can be indicating a a real short term reversal or at the least, some sideways trading.

Nifty Futures - 5 Minute Intraday  Chart

   

Nifty Futures - Daily Chart    

S&P CNX Nifty Index - Weekly Chart