Nifty has posted a positive weekly close

On Feb 11, 2010 Nifty has posted a positive weekly close, which clearly signals that this is a pullback of the fall from 5310 to 4675, which was a five-wave decline. From here, Nifty may test its 20 daily moving average (DMA), which is near 38.2% retracement level and this is also our short-term target. So, on a short-term basis the trend is up for the pullback, till 4748 holds and on the medium term the trend remains down. On the daily charts, the momentum indicator is in buy whereas on the weekly charts the indicator is in sell. This shows that the index is just retracing its fall, which again will be followed by an impulsive down-move. The strong resistance on the upside is at the 20 weekly exponential moving average (WEMA), hence the pullback can stretch to the maximum till the 20 WEMA.

On the daily chart, Nifty is trading below its 20 DMA and 40 daily exponential moving average (DEMA) pegged at 4941 and 4980 respectively, which are the near-term resistance. The momentum indicator (KST) has given a positive crossover and is trading below the zero line. The market breadth was positive with 799 advances and 492 declines on the NSE and 1,617 advances and 1,194 declines on the BSE.

On the hourly chart, Nifty is trading above its 20 hourly moving average (HMA) and 40 HMA placed at 4795 and 4775 respectively, which are now the short-term supports. The momentum indicator (KST) has given positive crossover and is trading above the zero line.

Nifty and Sensex were 70 and 230 points up respectively.

Irrational recovery in Nifty

On Feb 09, 2010 Nifty opened flat and was trading negative one hour into the trade. However it recovered thereafter to make higher highs and higher lows on the hourly chart. The index has been holding on to its 20DMA pegged at 4655 and has bounced back from there--a bullish sign in the short term. On the daily chart, the NSE benchmark has fallen in a 5 - wave pattern from 5302 to 4675 and expected to retrace around 50% i.e. 5010 levels of the fall. The index had formed an outside bar and has given a breakout on the upside, which is a bullish sign for the market. So, until 4675 is intact the index should retrace the fall and take resistance at 20 DMA.

The index is currently trading below its 20 DMA and 40 DMA placed at 4986 and 4999
respectively, which are crucial resistance levels going forward. The momentum indicator (KST) is on the verge of giving a positive crossover and trading below the zero line.

On the hourly chart, Nifty is trading above its 20 hourly moving average (HMA) pegged at 4747, which is a crucial support in the immediate run. The momentum indicator (KST) has given a positive crossover and trading around the zero line. The market breadth was positive with 707 advances and 587 declines on the NSE.

Both the indices ended higher—Nifty 32 points and the Sensex 106 points up.