As all are aware that Nifty has raised from the bottom 5500.65 which touched very recently on 10/04/13, and after that nobody expected that the Nifty will raise that much upto 5994 within very short time period. Many of them were confused as Gold market as crashed some what and now stabilizing so like the same what will be happening next in Nifty future. There is an saying that “Very fast climb may give an skip at any time”. As like that Nifty future may reverse at any time in an simple wordings. But we all need to know the technical aspect that why Nifty should get down. Below are some of the valid points with probability, as any things may happen at any time.
In the above given chart Nifty future has touched the resistance price, resistance is nothing but supply exceeds demand which in other words it can be said as it is overbought area. Support levels are nothing but demand exceeds supply, which it is oversold area. Now as per the above chart given now the Nifty is in with Gaps which need to be filled, Gaps are given in white arrow marks.
In the week before, we had marked the resistance zone in red horizontal lines which we have left on this week’s chart. Notice that price went into a resistance zone on Thursday and then fell on Friday. Will this be a reversal? One can never be sure. It is likely the prices could go higher into the zone and then fall.
Apart from the supply zone putting a downward pressure on price, Nifty is also being stopped by the Bollinger Bands. The bands are shown by the curving lines. The upper band shows overbought levels, the middle band shows the median levels and the lower band shows oversold levels. You’ll notice that the latest bounce in the Nifty happened when index went outside the lower Bollinger Band and also hit gap support. This was a double whammy leading to parabolic move up. Look at where the Nifty is now. On Thursday the index went above the upper Bollinger Band, indicating an overbought condition and also hit the resistance zone. This again is a double whammy of resistance. On Friday, the index already reacted and fell. It is still possible for the index to hover in the resistance zone before falling. Right now the highest probability is for the index to fall at least till the middle line of the Bollinger Band. If that line is broken and the line points down we could see the resumption of sell off.
The second probability is that the index could move sideways before choosing a direction. The longer the index hovers at the resistance level, the higher the chances are of its breaking out higher. However, now is not the time to buy into the Nifty, given that price is at resistance. We’d be short the Nifty with a stop above the resistance zone.