NIFTY View - 17-Oct-2011

NIFTY View - 17-Oct-2011 - Be Careful With the Longs

An update on the post W Formation on the Cards. After the beside post NIFTY has rallied close to 450 points & now is at crucial resistance. Reliance Q2 results has come & hasn't been that great (Poor GRMs even with weaker rupee & Operating profit lesser than last year if other income is excluded). So it wont be pulling the market away like it did last week. 

TCS & HDFC Bank's result is due tomorrow & if TCS indeed provides good results then there may be positive movements in the Large & Mid-cap IT Stocks like HCL Tech, Wipro, Patni, Polaris etc.

Now a close look at Hourly chart of NIFTY shows us that we are moving in a rising trend channel of roughly 100 points in width. So any move out of the channel would mean a swift 100 point move. Also need to remember over the past 8-9 weeks we are in the range of 4700-5170 (A rough 470 point range).

NIFTY - Hourly Charts

Interesting thing to note apart from the Movement of NIFTY in the trend channel is the Indicators. MACD has gone below the signal line & A small divergence is seen in RSI & ROC (Not making new highs).

Trading Strategy: Be careful with the longs. Keep a close watch on the levels of 5170 & also on the Trend channel break-out & break-down & initiate trade accordingly.

Support 1 is at 5040 levels & Support 2 at 4960 levels.

It's still a buy on declines. So an Long entry can be made at the support levels.