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Tuesday, April 10, 2012

Market Direction - Nifty Trend - Apr 10th

Nifty has been behaving as expected and like a very obedient child from past couple of days. Today, in addition to today's commentary, I am posting a interesting long term chart, which shows the strength of long term Trend Lines and how they give direction to prices. First lets look at the short term story below:

As the chart above shows, nothing really has changed for Nifty, it has been rejected earlier by 50 day SMA, like we noticed in our earlier posts here. Post that, we saw a sizable red candle yesterday, which was followed by a interesting candle today. Now candles speak a lot! They are a talkative bunch, and tell a lot about themselves. This candle today, marked in circle, started off as a strong red candle similar to yesterday, but was bought off in later part of the day, this signalling a short term reversal. This creates a typical "Hammer", which is bullish behavior.

As the wedge is narrowing down, Nifty has been directionless from 21st Feb 2012 now, there is a good possibility of a breakout. This is a bullish wedge, so the upside breakout has a stronger possibility. Lets look at the long term chart which I mentioned in the beginning of the post:

This chart above is a beautiful chart, which shows a long term Trendline which has been providing resistance to market from last 1+ year, and is now turned into a support Trendline from past couple of months, providing support to the falling wedge. This is a amazing view of how a Trendline has been valid for more than one year and providing direction to Nifty. Like we said, Nifty has been a obedient child for long :)
Happy trading and investing!

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