Nifty: EOD 10.02.2012

My today's post is for my friend Piyush.I know most of retail traders are like him.I am also like him.But only difference between us is EW which gives the sharpest Entry & exit points for daily trades.At times the forms taken by Correctives leave you exasperted but thats what Market is. No one has been able to device a perfect trading tool so far,but arsenal without EW is INCOMPLETE.

End of the week,so lets have a look at the Weekly charts:


Wow,what DOJI !!!
Can it lead to formation of Evening Star?
Well ! that would be answered at the end of next week only.

However few other points clearly stand out:
1.Neutrality as far as momentum is concerned;
2.No negative divergence so far on RSI or Stochastic;
3.RSI not even in over-bought zone(however that is not much important as last time it got into overbought zone that near Diwali 2010;

So the most important observation is DOJI significant of NEUTRALITY as far as Weekly momentum is concerned.

Now lets come to Daily Chart:


Most significant observation,to me,is the formation of a support zone in 5325-5335 band.Also RSI & Stochastic are not only in over-bought zone but also showed a clear negative divergence via-vis the price action. But Nifty managed to close above 5DEMA and also the lows formed during last three days were at 5325,5339 and 5341(so no lower lows so far)and highs have been at 5397,5423 and 5427(so no lower highs so far),so weakness though indicated, has still not been confirmed even on daily charts.Though indications of weakness,particularly the negative divergence is most noticeable and may well be a precursor to a Corrective(if not reversal).

And last but not the least, Hour Chart:




Here the negative divergence in RSI and price action is very prominent.However,most noticeable part is that had any-one tried to trade on the basis of closing above or below 5 Hr.ema, only whipsaws would have resulted--no profits.

And even now,all ONE can say is SHORT BELOW 5325 and so my friends,EW has to be a part of your arsenal if you wish to fine-tune your trading skills.

Have a nice week-end.See you all on Monday morning.

Raghu