MARKETS FOR 3RD SEPTEMBER

AS WAS MENTIONED EARLIER, SPOT NIFTY TESTED THE CRITICAL 50% RETRACEMENT LEVEL OF 5240 ON FRIDAY TO CLOSE THE DAY, WEEK AND THE MONTH OF AUGUST AROUND 5258 SPOT LEVELS EXACTLY AROUND THE 50 DAY EMA. THE CRITICAL 50 DMA IS ALSO PLACED AROUND THE SAME LEVEL OF 5258 WHERE SPOT NIFTY HAS CLOSED ON FRIDAY. THE RISE OF DOW BY NEARLY 100 POINTS ON FRIDAY NIGHT  ALTHOUGH  UNDER NORMAL CONDITIONS SHOULD TRIGGER A GAP UP OPENING, YET AS LONG AS
SPOT NIFTY FAILS TO BREACH AND SUSTAIN ABOVE THE CRITICAL LEVEL OF 5286 THE HIGH OF THE JUNE MONTH MONSTER CANDLE, EVERY INTRADAY RISE TOWARDS THIS SPOT NIFTY ZONE OF 5282 TO 5286 SPOT  MAY BE MERCILESSLY SHORTED WITH PUNITIVE FORCE BY HAVING A STOP LOSS ABOVE THIS ZONE TO REVERSE FOR GOING LONG ABOVE THIS CRITICAL ZONE.

LAST WEEK SPOT NIFTY HAD MADE A WEEKLY HIGH OF 5399, LOW OF 5239 AND CLOSED AT 5258  WHICH LOWER THAN THE PREVIOUS WEEK ENDING 24TH AUGUST THAT  HAD A WEEKLY HIGH OF 5449, LOW OF 5369 & HAD CLOSED AT 5387. FORTUNATELY NIFTY SPOT HAS CLOSED AT THE JUNCTION OF 50 DMA & 50 DAY EMA. THE WEEKLY LOW AT 5239 WAS NOT ONLY AT THE 50% RETRACEMENT LEVEL OF 5240 BUT WAS ALSO EXACTLY AT THE 13 WEEK EMA. ALTHOUGH A NEGATIVE WEEKLY CLOSING AT 5258  AFTER FOUR CONSECUTIVE WEEKS OF BULLISH CLOSINGS, THE FACT THAT NIFTY SPOT HAS CLOSED BELOW THE LOWS OF ITS THREE PREVIOUS WEEKS THAT TOO WITH A MONSTROUS 20/20 RED BEARISH CANDLE BELOW 5261 WHICH WAS THE LOW OF THE WEEK ENDING 10TH AUGUST, IT IS NOT AT ALL HEALTHY SIGN FOR SPOT NIFTY  FOR THE COMING WEEK FROM 3RD SEPT TO 7TH SEPT. SO, ON ANY DAY AFTER A DEAD  CAT BOUNCE IF NIFTY FAILS TO BREACH THE PREVIOUS DAYS HIGH AND SLIDES DOWN  TO CLOSE BELOW THE 50% RETRACEMENT LEVEL OF 5240, THEN  IRRESPECTIVE OF ANY AMOUNT OF GOOD NEWS , ONE CAN FORGET THE LEVELS AND CLOSE THE EYES TO TRADE SHORT  AND HOLD THE SHORTS FOR GREAT GAINS ON THE LOWER SIDE.

ALTHOUGH THE INDICATORS IN THE DAILY CHARTS DECEPTIVELY LOOK OVERSOLD, YET THEY MAY CONTINUE TO SWIM IN THE OVERSOLD ZONE TILL SUCH TIME ONE DOES NOT SEE A TURN AROUND OUT OF THE OVERSOLD ZONE. THE WEEKLY INDICATORS ALTHOUGH HAVE GONE INTO THE OVERBOUGHT ZONE, YET THESE HAVE NOT YET GENERATED SELL SIGNALS IN THE WEEKLY CHARTS IN SPITE OF THE MONSTROUS RED WEEKLY CANDLE THAT HAD A 2% LOWER CLOSING THAN ITS PREVIOUS WEEK. THE WEEKLY DOJI  FOR THE WEEK ENDING 17TH AUG FOLLOWED BY THE INVERTED HAMMER WITH ITS TOE NAILS JUST BELOW THE WEEKLY UPPER BOLLINGER BAND AND BOTH THESE WEEKLY CANDLES FOLLOWED BY THE MONSTROUS 20/20 RED WEEKLY CANDLE FOR THE WEEK ENDING AUG 31, CERTAINLY FOREWARNS OF GREAT DANGER TO THE INDIAN MARKETS UNLESS BULLS UNITE AND LIFT NIFTY ABOVE THE SPOT NIFTY LEVEL OF 5303 TO HAVE A DAILY CLOSING ABOVE THIS SPOT LEVEL.

AS WAS MENTIONED MANY  A TIMES IN THE PAST, THE CROSS OVER OF 50 DMA BY THE 20 DMA FROM BELOW AND PRICE CROSSING BOTH TO CLOSE ABOVE BOTH THESE ALTHOUGH IS WRITTEN IN  COPY BOOKS AS BULLISH, YET IN MODERN DAY TRADING PARLANCE IT A DECEPTIVE UP MOVE AND PRICE INVARIABLY FALLS TO RETEST & BREACH BOTH 20 & 50 DMA. THIS HAS EXACTLY HAPPENED AGAIN LAST WEEK WHEN NIFTY FELL TO FIRST BREACH 20 DMA AT 5335 & THEN  BREACHED THE 50 DMA AT 5258 TO FALL TILL 50% RETRACEMENT LEVEL OF 5240 TO CLOSE EXACTLY AT BOTH THE 50 DMA & 50 DAY EMA AROUND 5258.

SO TRADERS MAY SHARPEN THEIR SHORTING WEAPONS AGAIN AND QUIETLY KEEP IT HIDDEN TO USE IT QUICKLY AT THE TIME OF NEED IN CASE SPOT NIFTY FAILS TO CLOSE ABOVE 5300 AND MORE SHORTS BE ADDED IN A RHYTHMIC FASHION IF SPOT NIFTY FAILS TO HOLD THE 50% LEVEL OF 5240 AND CLOSES BELOW IT. BELOW 5240, THE LOWER BOLLINGER BAND AROUND 5220 FOLLOWED BY THE CRITICAL SUPPORT OF THE SUPPORT LINE FROM THE SWING LOWS OF JUNE AND JULY NOW AROUND 5200 SPOT & DANGEROUSLY ABOVE THE 61.8% FIBO RETRACEMENT EXACTLY AROUND 5191  ARE THE SUPPORTS, A CLOSE BELOW WHICH MAY SEND THE BULLS PACKING TO TIMBUKTU FOR A MONTH OR TWO TO RAISE THE NOSE ABOVE THE NILE WATER WHEN SPOT NIFTY REACHES NEARER TO 4900. SIMILARLY NIFTY SPOT NOW AROUND 5258 HAS TO MOVE UP TO BREACH 5303 TO 5315 ZONE TO CLOSE ABOVE IT TO THREATEN THE BEARS AS IN THAT CASE BULLS FOR SURE WILL BE BACK IN ACTION TOWARDS MUCH HIGHER LEVELS.

FOR NEXT ONE TO TWO DAYS OF TRADING, THE 90 POINT RISE OF DOW ON FRIDAY NIGHT MAY TURN OUT TO BE DECEPTIVE AS HIGHLY OPERATOR INFECTED SGX MAY START TO TRADE MILD TO REDUCE THE OVERNIGHT BULLISH SENTIMENT GENERATED DUE TO DOW’S RISE. THE ONLY GRACE OF GOD MAY BE THAT NIFTY HAS MAD SEVEN CONSECUTIVE DAYS OF LOWER LOWS RIGHT AFTER MAKING THE 23RD AUGUST HIGH OF 5449. HENCE THERE IS A HIGH POSSIBILITY OF A REASONABLE AMOUNT OF DEAD CAT BOUNCE  FOR NEXT TWO TO THREE DAYS.
HOWEVER THE DEAD CAT BOUNCE IN CASE FAILS TO BREACH AND SUSTAIN ABOVE THE AUG EXPIRY DAY HIGH OF 5343 SPOT THEN THIS DEAD CAT BOUNCE MAY CHANGE ITS NAME TO ‘THROW THE DEAD NIFTY’ AND RETEST OF 5200 SPOT NIFTY LEVELS WILL BE A CERTAINTY IN NEXT FEW DAYS. THE OVERSOLD LEVELS OF INDICATORS IN THE DAILY CHARTS MAY GIVE SOME UP MOVE AT LEAST TILL THE DAILY INDICATORS REACH OVERBOUGHT LEVELS( WHO KNOWS THESE DECEPTIVE DAILY INDICATORS MAY TAKE AN ABOUT TURN FROM THE HALFWAY MARK TOWARDS THE LOWER ZONE AGAIN TO TRIGGER A SLIDE IN THE WEEKLY INDICATORS ALSO)

FOR MONDAYS INTRADAY TRADING PURPOSE, SPOT NIFTY FINDS INITIAL RESISTANCE AROUND 5277 TO 5282 ZONE, ABOVE WHICH NIFTY SPOT HAS TO SUSTAIN  IN ORDER TO AVOID A REPEAT OF MASSACRE OF THE BULLS AT THE HANDS OF THE BEARS. A BREACH AND MORE IMPORTANTLY SUSTAINING ABOVE 5277 TO 5282 SPOT NIFTY ZONE WILL GENERATE SUDDEN MASS SHORT COVERING BY THE WEAK BEARS WHO WILL THINK THAT BULL RUN HAS RESUMED AND IT IS BETTER TO QUIT EARLY. SIMILARLY ON THE LOWER SIDE, A FAILURE TO SUSTAIN ABOVE THE 5277 & 5282 ZONE, SPOT NIFTY CAN FALL QUICKLY, AS THE BULLS WILL BE WHIPPED LEFT RIGHT & CENTER BY THE BEARS TO INITIALLY SEE 5240 FOLLOWED BY 5230 BELOW WHICH A STONE LIKE FALL MAY BE SEEN TOWARDS 5215  OR LOWER LEVELS TO BE AT THE STRIKING DISTANCE FROM THE 61.8% RETRACEMENT LEVEL OF 5191 SPOT, WHICH WILL DECIDE THE FATE OF NIFTY IN NEXT FEW DAYS WHETHER TO BOUNCE FROM EITHER OF 50% RETRACEMENT LEVEL OF 5240 THAT WAS THE LOW OF LAST WEEK AS WELL LAST 4 WEEKS ALSO  OR  MAY SLIDE TO BOUNCE FROM THE INITIAL SUPPORT LINE AROUND 5200 OR THE FINAL 61.8% LEVEL OF 5191 TO AVOID A FURTHER SLIDE TOWARDS THE BIG BUTCHER COUPLES  WAITING FOR A KILL AT  THE 200 DAY EMA AROUND  5161 OR THE 200 DMA AROUND 5121 SPOT LEVELS IN SEPTEMBER IT SELF.

FOR TRADERS OF NIFTY FUTURES THAT HAS INHERENT CHAMELEON QUALITIES IN-BUILT WITHIN  IT & HAS CLOSED AT 5286 ON FRIDAY, ONE MAY TRADE LONG  FROM THE START  & MORE LONGS BE ADDED  IN CASE SHORT COVERING PUSHES NIFTY FUTURES ABOVE 5310 TO 5315. SIMILARLY TRIGGER HAPPY SHORTERS  MAY TRADE SHORT  ON FAILURE OF NIFTY FUTURES TO SUSTAIN ABOVE 5310 TO 5315. SIMILARLY IN CASE NIFTY FUTURE SLIDES BELOW  5265 TO 5260, MERCILESS SHORTING MAY BE RESORTED TO FOR MUCH LOWER LEVELS. EVEN AFTER A GAP UP OPENING IN CASE NIFTY FUTURES FAILS TO RISE FURTHER BY AROUND 25 POINTS FROM THE GAP UP OPENING, THEN ALSO ONE MAY TRADE SHORT TO BE IN LINE WITH THE OPERATORS FOR GREAT GAINS ON THE LOWER SIDE BY HAVING A  STOP LOSS AT A  REASONABLE DISTANCE TO REVERSE FOR LONGS ABOVE THE STOP LOSS .

Source:QuensTrade