Saturday, February 5, 2011

Weekly roundup (28.1.11 to 4.2.11)

The Nifty closed at 5604.3 for the week ending 28Jan 2011. This week it opened weak at 5452.85 and then after trading in a narrow range between 5539.15 and 5402, it finally gave in to supply pressure on Friday the 4th and after seeing an intra day low of 5369.05, as the stop losses got triggered before closing at 5395.75.
The Friday trading was significant because for the first time since May 2010, the entire candle for the day was formed below the 50 week moving average. However there is the silver lining in that the Nifty has filled up all the weekly gaps of the week on week rises of August to September 2010 and retraced 61.8% since May 2010 levels of 4800.
The next two trading days will be significant in that either there will be a final capitulation establishing that Friday's sell off was a false breakout or else a medium term bearish trend will be established with upside capped at the 50 week moving average. For Nifty options traders, Straddle is advised.

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