Weekly Technical Update - Nifty

Weekly Technical Update - Nifty for the week 2-6 June 2008

In our previous update, we had continued with our bearish outlook indicating that the nifty is
set to declined to following levels: A. 4787 – 4775 / B. 4660 – 4630. The nifty opened the week at 4954 and declined to as low as 4802, before closing the week at 4870.
The level of 4788 – 4775 is an important support level. The level of 4788 represents the 50% retracement level of the recent rise (the rise which is seen between the rising channel in the chart above) from low of 4468 to 5299. Further there is good support at 4775 as marked in the chart above. The levels of 4788 – 4775 thus assume a lot of technical importance and looking at the short term indicators which are getting steady, we can safely assume that the technical picture would turn weak, only if it breaks below this critical support range. On the upside immediate resistance comes in at 4945 – 4958, above which the nifty is likely to gain in strength and could advance to levels of 5051 / 5110.
To conclude, it is likely that the immediate movement in the nifty would be in a range, with levels of 4788 – 4775 (downside) and 4945 – 4958 (upside) acting as the borders of this range and also acting as trigger point towards possible direction, in which the nifty is likely to move. A move below 4775 would be negative and indicate further declines at the least to support range of 4660 – 4630, below which the decline could intensify and test the previous low of 4468. On the upside the nifty would gain momentum above 4945 – 4958 and then would try and move to levels of 5050 / 5110.
Nifty supports: 4787 - 4780 / 4660 – 4630 / 4468
Nifty resistances: 4945 – 4958 / 5050 / 5110 / 5203 – 5227

MatrixCap