Nifty(5265.75): Nifty defended the 5200 level and bounced off the lows of the day. The key takeaway from yesterday’s price action was that the decline has been in a five legged fashion.
Nifty - Hourly Charts
When a market declines in five legs (see chart above), it is normally part of a larger decline. The ideal levels to watch for a turn after this short term push would be around 5324 and 5350. Volumetric analysis also tells us that 5320 and 5340 could offer fair amount of resistance. The 5350 level seems more ideal to me. The ratios drawn from this level coincide well with important supports of 5160 and 5030 (that way the markets could posture an image of support being held when it drops).
The anniversary of last year’s peak falls on Saturday, the odds of market running into some serious resistance today or on Monday is a good possibility. (Just one example if you are curious why this is important: the Satyam scandal hit the markets in 2009, exactly on the anniversary of 2008 peak). May be the G20 meet and the ECB rate cuts could provide the short-term euphoria. Stay nimble.