Nifty Needs a Breather - Manoj Bhagra

Voila! Our step-by-step approach to things worked wonderfully. It is better this way, than to get notexcited and throw caution to the winds. I did not update the blog yesterday; anyways what was written on the weekend post has played out to perfection.

We have approached the so-called area 3175/3200 by slowly overtaking the resistances at 3050 and 3150. If you have observed the intraday action for last three days, we have had good dips and rangebound moves for most part of the day, before surging in the late afternoon trades to give ourselves higher closes at the end of each day.

This action has also bought down the nearest 20-period MA (on the EOD), and that is what we have kissed today. Logically we should see a reaction here, considering the fact that this is also the trendline resistance. We are getting overbought on the hourly (charts above-left), and the MACD histogram is sloping down. The crossover of the 20- and 50-period moving averages at 2950 is a good area of support on the hourly charts, though now 3050 also might hold the fort.

As far as the Daily chart is concerned, as mentioned earlier, we have approached the resistance zone and it would be a good idea to catch a breather before attempting the next up move to 3300-3350.

Another point of concern is that in all our excitement of this furious run-up we have to ponder upon a few unfilled gaps we have left below. The sooner they are closed the better for us.

“The good fighters of old first put themselves beyond the possibility of defeat and then waited for an opportunity of defeating the enemy. To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself.” (from Sun Tzu’s Art of War).