Nifty will Crack - Minor corrections

Dear readers,

I have made some minor alterations on charts. In the following chart I have changed my trend line a bit (to take more conservative view of market) The support which was near 5600 had shifted to 5450. Similarly the neck line for the pattern of heads and shoulder had shifted to 5200 instead of 5300. Therefore any decisive break below 5200  will result into a further fall up to 4700.

Nifty Weekly chart

This view is confirmed by the fact that if we take retracement from the lows of March 2009 to high of November 2010.  The first retracment (23.6%) comes to around 5444. Which is where the market is taking the current support. This is also the trend line area as we can see from the charts.

My overall view remains bearish. A pull back may come next week but that should result into a further fall in the market. 

Silver - Right on Target

My call on silver have been right on target. When I gave a sell call on silver it was trading t 66,000 on MCX. At that time it seemed that silver will not go above a 72,000 silver made a high of 72459 and have cracked 18% from that level to a low  of  59100.

Silver Weekly Chart on MCX

From the current chart patterns it seems that silver will correct further to 35 dollar levels which may correspond to 50,000 on MCX. There may be a temporary pull back on silver but overall I will silver at 65,000 with a stop loss of 73,000 and target of 50,000

Silver Weekly chart - Comex

Even if we look at the retracement levels we can see in the given chart that silver had done 38.2% retracement of the of up move which is at 40.88 levels. As the trend line is broken, I expect silver to correct further upto 50% retracement level. which will result into silver falling up to 35 -38 levels. 

Silver Daily chart

Nifty may crack.

Today the market went down with a thud and some very interesting patterns are now appearing on the charts. the first chart shows that the trend line which is forming since the lows of March 2009 is broken today. If the market closes below 5600 on a weekly basis than it may cause further weakness in the market. If we take 38.2% retracement of the entire up move from the bottom of 2200 the first supports comes at 4700 levels.

NIFTY WEEKLY CHART

The second chart is also a weekly chart of Nifty. In this chart we can clearly see a head and shoulder pattern developing. The neckline for this pattern is around 5350 -5300. Therefore if the market closes below 5600 (on weekly basis) the next target will be 5350. But looking at the larger patter I believe that there is extremely high probability that the support of 5300 will be broken.

Nifty Weekly Chart

If 5350 is broken the most likely target for Nifty will be 4700 which is the target for the pattern. As I have marked in the third chart

 Nifty Weekly Chart

The most likely scenario which is going to be played form the current levels as per my understanding is that market will crack to 4700. If a person wants to go short he can go short if the market closes on Friday below 5600. With a stop loss of 5850 and target of 5350 and if 5350 is broken the next target will be 4700.

Readers should also keep in mind that there is alternate scenario which is forming right now. In the chart we given below we can see that Nifty is also forming a inverse head and shoulder pattern which is inherently a bullish pattern. If nifty fails to close this week below 5600 than there are high probability that market may bounce back and break the trend line which is near 5850. The most likely target for any break of trend line will be 6500.

Nifty Weekly Chart

To summarize my post, If nifty closes below 5600 the most likely target for nifty would be 5350 and 4700 (if 5350 is broken). I will give 70% probability to this scenario.

The alternate scenario is that market will fail to close below 5600 (weekly basis) and it will move up and break 5850. In that case market can go up to 6500.