This is Nifty Futures as on 26 November 2012
Nifty Future made an intraday low at 5459 on 20 Sep 2012. Two months later, on 20 Nov 2012, it again made a low of 5456. This bullish double bottom formation led to a strong up-move, albeit temporary as of now, to a high of 5656 today, 26 Nov 2012.
Whatever the technical analysis books and experts say about double bottom, it is never a Buy set up with 100% accuracy. Admittedly, there is a flare up for reasons widely mentioned in books but whether that flareup will lead to subsequent and any significant upward rally or not is largely a matter of other factors: the underlying strength and direction of the rally; whether the level of the counter rally is based on a valid and strong correction-ending level (there are 5 such correction-ending levels but only 3 are strong enough to initiate a counter rally); the bear or bull levels in vicinity and also the state of the momentum.
Considering all these, I find little technical reasons to justify a hypothesis of 6000 level in Nifty (that may perhaps be 6030 or so in Nifty Future) in near future. However, the bullish double bottom has given an upward thrust to Nifty and let me examine how far it can take Nifty now.
One, as momentum suggests, there is still a buying strength and considering the fact that Nifty Future has made a high around 5820 on 7 Nov, which was incidentally significantly above the Last level; Nifty Future has to make it back to 5850 level made on 5 October. This much is certain.
Also, a bullish Inverted Head & Shoulder formation is a distinct possibility as twice Nifty Future came back close to making the right-shoulder breakout. So once the breakout comes at around 5660, Nifty should jump to 5750. from there, another 100 points will not be too far.
However, there are counter signals also. 1. The fact that Nifty Future has actually failed to make it to 5850+ in its second attempt has made it technically vulnerable to a correction below 5555 levels. 2. Below 5590, the down move will be confirmed and Nifty will fall to 5490 level.
To sum up, Nifty Future has a good 100 point upside if it can break above 5660. At around 5750/60 it can be analysed whether it can climb back to 5850 and higher depending on available technical signals. The technical system I follow suggests it will be done. But 2 developments stand in the way of such up move. 1. Failure to break past 5660 and 2. Once past the 5660, Nifty fails to make 5750 and falls back breaking below 5590. That will be end of the 6000 dream for quite some time as Nifty will be headed towards 5490 then. And anything in-between will remain a largely sideways movement.
Nifty Future made an intraday low at 5459 on 20 Sep 2012. Two months later, on 20 Nov 2012, it again made a low of 5456. This bullish double bottom formation led to a strong up-move, albeit temporary as of now, to a high of 5656 today, 26 Nov 2012.
Whatever the technical analysis books and experts say about double bottom, it is never a Buy set up with 100% accuracy. Admittedly, there is a flare up for reasons widely mentioned in books but whether that flareup will lead to subsequent and any significant upward rally or not is largely a matter of other factors: the underlying strength and direction of the rally; whether the level of the counter rally is based on a valid and strong correction-ending level (there are 5 such correction-ending levels but only 3 are strong enough to initiate a counter rally); the bear or bull levels in vicinity and also the state of the momentum.
Considering all these, I find little technical reasons to justify a hypothesis of 6000 level in Nifty (that may perhaps be 6030 or so in Nifty Future) in near future. However, the bullish double bottom has given an upward thrust to Nifty and let me examine how far it can take Nifty now.
One, as momentum suggests, there is still a buying strength and considering the fact that Nifty Future has made a high around 5820 on 7 Nov, which was incidentally significantly above the Last level; Nifty Future has to make it back to 5850 level made on 5 October. This much is certain.
Also, a bullish Inverted Head & Shoulder formation is a distinct possibility as twice Nifty Future came back close to making the right-shoulder breakout. So once the breakout comes at around 5660, Nifty should jump to 5750. from there, another 100 points will not be too far.
However, there are counter signals also. 1. The fact that Nifty Future has actually failed to make it to 5850+ in its second attempt has made it technically vulnerable to a correction below 5555 levels. 2. Below 5590, the down move will be confirmed and Nifty will fall to 5490 level.
To sum up, Nifty Future has a good 100 point upside if it can break above 5660. At around 5750/60 it can be analysed whether it can climb back to 5850 and higher depending on available technical signals. The technical system I follow suggests it will be done. But 2 developments stand in the way of such up move. 1. Failure to break past 5660 and 2. Once past the 5660, Nifty fails to make 5750 and falls back breaking below 5590. That will be end of the 6000 dream for quite some time as Nifty will be headed towards 5490 then. And anything in-between will remain a largely sideways movement.
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