Nifty PreMarket View.

Rajeev Verma's(aarvee) Observations:

WHAT THE MARKET IS TELLING US:

• Last close of 5088 is above Daily 5 high ema,Week high ema and Month ema indicating strong uptrend.
• The prices are trading above 5ema,20ema,50ema,&100dma convincingly indicating strength
• 5ema & 20ema MA lines have crossed bullishly,indicating short term bullish trend.
• 20ema & 50ema MA lines are yet to cross bullishly for an indication of medium term strength
• Nifty has closed above 20Week ema after 5 weeks of trading below it.
• It is important to note that 20ema,50ema,&100dma are bearishly aligned ,indicating all is not well still.

.WHAT TO EXPECT:

since indicators are in Overbought region,a Correction is expected

• this can happen from approx 5150,which is Weekly R1 OR
• from approx 5180,which is the H&S target,78.6% Retrace of correction from 5310-4675,Monthly R2 and importantly the Trendline Breakpoint of the major Uptrend Line supporting since March 2009. 5180 thus becomes the major resistance
• so approx 5150-5180 levels are major resistance.

if the market corrects from above levels,support will come at

·Weekly S1 at 4992,

·At previous resistances now to act as support at, 20Wema of 4997 and 100dma of 5010.

·a healthy 33-35% retrace of the upmove from 4675 to 5150-5180 will approx. be at 5000 levels.

So approx 4990-5000 levels provides good support

IMPORTANCE OF 4950:

• Weekly 5ema is at 4961, Weekly Trend is positive above it and negative below it.(As close has been above weekly high ema ,dips to weekly ema are expected to be bought into)
• Monthly 5ema is at 4965,so similarly it decides Monthly Trend.
• 20 dema,indicator of Short term trend, is approx at 4950.
• Remember that 4950 was previous important Resistance which could not be taken out in derivative expiry of Feb.

Now a close below 4950 will be trend reversal point both in Week and Monthly time frames.So we can safely assume 4950 as SAR level on closing basis

.CAUTION.:

• We may not get the –ve diversion we are looking for in the charts if it is not a Trend Reversal. Nifty can correct up to 4950 and still be in the Uptrend. so we should trade the price not the indicator.
• As the trend is up, indicators and patterns on negative side may not give desired results .
• We must trade light on bullish side expecting a sudden correction due to overbought conditions.
• Since there has been a sustained upmove,markets can correct from overbought region and may move sideways for a week or two as indicated by falling ADX14 line from above 40.and 20ATR quiet range of apprx.80.
• Levels of 5180 or 4950 on closing basis should decide next conservative long or short trades.