August 21st 2012 Nifty Future Price Action

Nifty Future on Friday had fallen below the 5380 support turned resistance level after a failed breakout of the 5425 level. The corresponding level in Nifty Spot is 5352 and 5400. Nifty Future had on Friday had closed at the 5380 level. Global and Domestic cues were positive and Nifty Future opened at the Friday close and the test below 5380 was violently rejected and Nifty Future resumed the second attempt at up move. I have given below the 5-min Nifty Future Chart with my observations.

1. Moderate volume up move above 5400 level signaling bullish bias. The move below the previous days close was violently rejected. A long entry at 5385 with stop loss below the Day’s open was a good long trade with target as the move above 5400.

Conclusion: Volumes were not very high for the previous days high to be taken. Any long entry would have to be closed near trouble areas like 5400 and 5410 (the previous day initial range high which held for 3 hours).

2. Low volume pullback with listless price action. Bears were not taking initiative to move Nifty Future lower but were resisting up move attempts above 5406 level. Nifty Future makes a initial range of 5395 to 5410 with a weak attempt to take out the 5395 level.

Conclusion: No trigger either for long or short trade entries from 10:00am to 12:40pm.

3. Downward trend line break with moderate volumes. Nifty Future attempts to break the 5406 level which was the previous days initial range low. Nifty Future breaks both the down ward sloping trend line and the 5406 level.

Conclusion: Here a long entry would be pre empting the market. Better to wait till after the break out and price returning to test the 5406 level. As break out was with moderate volume a Break out Pullback close to the 5406 level would be a good long entry

4. Low volume pullback till 5408 is an excellent long entry with stop loss at 5400 and target as the move above the previous days high and the break of 5400 Nifty Spot level.

Conclusion: Excellent long entry at 5408 only issue is up move starts after 2:40pm.

5. High volume up move starts with Nifty Future taking out the 5425 level with huge volumes.

Conclusion: Hold the trade till closing as move starting after 2:45pm tends to close at the days high.

Summary: A very listless trading day but the hint for the up move was the early morning strong move above the previous support turned resistance turned support of 5380. The pick up in volumes was above 5400 and after 2:45pm. The Bias was bullish and there was no change in the Bias during the day.