NIFTY has been moving up for last 3 days and closed higher than previous day. However, in my view, there is little strength in the UP move as of now.

Let’s look at the chart below to see how the market has been moving.



Please see the first circle marked at 50% – 5092.25. This is the 50% of the last range down which was 7th April – 5398 to 25 May 4786 or in other words, half way retracement in this range. According to GANN, 50% of a price movement is a major milestone in any stock movement and it either acts a support or resistance.

I was looking at 5092 level to understand which way NIFTY is expected to move. If it broke through this level, It would be headed up to 5500-6000 level in next few weeks. Breaking through a level means that the market or stock should CLOSE above the resistance level for 2 consecutive days, SUPPORTED by STRONG Volumes.

Now go back to the chart and see what’s happening to the volumes when NIFTY is moving higher. I have marked them in circle. Volumes are declining. This is a sign of weakness in the market. It shows, in a way, that the professionals are not interested in this UP move or the market at the moment.

So, it could be a false break out. It may still move higher, but I would not take a chance.

Now let’s look at weekly and 3 Day Swing Charts:



As is evident from above chart, both WEEKLY and 3 DAY SWING charts show the TREND as being DOWN. In fact, I am getting SELL signal on 3 DAY SWING chart. Target is 4590.

If NIFTY trades below 5090 on Monday, June 7, I will go SHORT on NIFTY with targets of 4730 and 4592. STOP LOSS at 5150.

Happy trading

Be profitable!

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