Jun 212011

In yesterday's market action, India's Nifty breached an important trendline in a convincing fashion. All the corrections since Nov 2009 stopped right at this trend-line (see chart below) and kept the up trend intact.

Nifty breaches a 20 month trend-line

The weight behind this breach was ONGC, which also happened to complete a Head and Shoulders top on its weekly chart.

ONGC completes a head and shoulder pattern

Though Nifty is yet to break the February low of 5177, considering the fresh weakness in top four Nifty stocks (ONGC, Reliance, TCS, Infy), it looks like it would just be a matter of days before this level is violated. Relief rallies if any, are likely to come under pressure between 5400-5485.

  21 Responses to “Nifty breaches a weekly trend line”

  1. hello sir how are you.

    all the articles are very informative in nature.sir how to avoid side ways market on any time frame…thanks in advance

    • There is no tool that can inform us clearly that market is about trade sideways. But once you see a range contraction, we have to stay on the sidelines until the range is resolved. Channels are quite useful within the range.

      Good trading to you.

  2. Dear Jai

    Hi and Thanks for the reply.I just wanted to know whether can go for a short in nifty at current levels or is it prudent to wait till higher levels.Pls advise.


  3. Jai,

    What do you feel about SBI ? Is it time to buy ? Also, you have been superb with you prediction on the breakdown. Where do you see it end ?
    Thanks for your effort. BTW, I am a senior executive in IT industry and like the fact that you took the plunge to follow your dreams and calling. Good luck.


    • Hi Rut,
      Even when the markets go down there are stocks that outperform the market and go up. From the looks of things, SBI does not look like it will outperform the market big time. It could probably outperform in relative terms. In the extreme short term it might bounce to about 2400. If you are trader you might be able to catch this. If you are an investor, it may not be the ideal time yet.

      The call on the markets is a minimum drop to 4800 Nifty. I plan to revisit the roadmap for Nifty after 5177 is broken and present various scenarios. At that point I visualise I would have a clear-cut picture.

      Thanks for your comments. Who knew my dabbling during my bench time as an ABAP consultant would turn out to be something so productive 😀
      All the best,

  4. Jai,
    Thanks for your views. Will follow more on your blogs.
    Even more impressive….giving up top SAP dollars to follow the dream ! Way to go.

  5. Dear Jai,

    I am short in Titan @ 212.12..My analysis is it may breach 200 level in coming weeks. Appreciate your advise on this specific trade..Plz note that in this specific case of Titan, i have so far taken into account a fundamental perspective/analysis and am backing it up with whatever little technical analysis i know of ..

    Also, plz suggest if there is any other section like Queries etc. where i should have posted this kind of stuff..

    warm regards,
    vimarsh p vasavada

    • If my data after the split is correct, it looks like it will drop to 185-80. I will use a stop of 231

      Good trading to you,

  6. Thanks Jai,

    Recent rally is very surprising..any interpretation…

    I assume, the price level u r suggesting are for cash-level..

    thnx again
    vimarsh p vasavada

  7. Dear Sir, Thanks a ton for your views.Today Mkts have rallied almost to 5485 which is your resistance point. I have 3 questions

    a) Do you think we again have entered the trading range of 5600-5400?
    b) Does this still remain a firm dntrend or sideways consolidation should start?
    c) If any resistance is to be watched out what lvl it would be and what would be yur trend reversal point?

    Thanks & Regards,


    • Hi Glen,

      I do not think we are going in to that range again. It may have shifted little more lower say 5500-5200 with the probability of 5200 breaking a little higher. If there is follow through buying to Friday’s session, the bulls would have nullified the advantage of the range break and the range would expand on the higher side. The next resistance is 5605 if 5485 falls.

      Best regards,

  8. Hi,

    I recently started following you…..and this blog (have been earlier reading anotehr blog called queenstrade). I appreciate the “out of the box” views, and wish you were open to subscription (I understand that currently you are not).

    In any case, while it is wrong to ask for free advise, however, I would be anxious to know your views on the following two queries:

    1. REC, and its recent decline, and what could be the levels to enter/exit.
    2. Nifty: My own analysis is that 4800 should be targettable in July, followed by 6300+ by February 2012….any comments?

    Thanks in anticipation


    • Hi Sunil,

      Thanks for the comments and welcome to my blog.
      REC looks like it has one more push down – 2 things to note, before that push there can be a good counter trend rally (may be 220) and the next push down has a probability of not breaking the June low, since the earlier push down was fast and quick. I’m not saying this is a bullish set up but if one is short we have to be careful. A nimble trader would use 176 as stop and try to play this counter-trend move.

      Nifty – yes one probabilty is the route you have mentioned but the high will be far higher than 6300. I will do a post on Nifty when there is a significant breach of any level be it up or down.

      Good trading to you,

  9. Jai,

    Good news first – good returns made in SBI. Thanks a ton.
    Bad news – now running short in nifty from 5475 onwards.

    How do u see this rally ? More to it or like to break down again and test the old low ?

    Please let know your thoughts.


  10. Dear Jai,

    I did one round of short trade in Titan (216 to 212) and today i moved out as trailing at 214 hit..The one thing i find wrt Titan is that its pretty volatile in its behaviour..Is it worth re-entering in short at around 216..how do you decide that..I use 100min EMA and 400 min EMA wherein i begin short position when 100min EMA crosses over and goes below 400 min EMA convincingly..However this indicator in current scenario is so misleading i.e. it has cross-above/below quite a time :)..Appreciate your technical analysis inputs..

    warm regards,
    vimarsh p vasavada

  11. Dear Jai,

    Is it a good time to buy 5500/5400 July Puts? Although we saw a strong upside move in the last few trading sessions, 5600 is seeming to be the ceiling for now – what do you say?

    Thanks & Regards,

  12. What would be the levels for confirmation of change in trend from bear to bull..was this a bear mkt or just a correction since Nov,2011 as sensex hardly fell 18% from Nov highs?..

    • Rajesh/Parag/Vimarsh/Rut and regulars,

      I’m away on holiday, will be back to markets next week. I wanted to do a post on Saturday night before starting my holiday but unfortunately the holiday mood got the better of me 🙂 Ok the markets in one sentence- still looks corrective (correcting the drop of 5944 to 5195). Will try to do a brief post with charts if possible. Hold on, do not get aggressive on either side.


  13. Dear Jai,

    I have shorted july nifty futers @ 5540, But today nifty gone above 5600 level. My qustion is this rally end here or move to upper side. Pls guied me shall i hold this shorts till july or close it.

    Thank you,

  14. Dear Sir,
    I have been following your comments on stock markets on CNBC,
    I am very much impressed by the explanation and the depth of the
    I have tried to get subscription for some product but failed as there is
    no slot available, i would be happy to get subscription some time in
    near future
    Dr. Vasant Bele , Nashik, Maharashtra

    • Hi Vasant,

      Thanks for your comments. At the moment, I’m not offering any products for subscription to individual investors. If I do decide to offer subscription services in the future, I will let you know. However, I’m sure you should be able guide yourself to some good trade setups based on the posts in this blog.

      Best regards,

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