NIFTY's Broken Shoulder :(

The closing today formed a complete head and shoulder pattern for Nifty. The Neckline (5350) was broken rather pretty quick. We see the next level of support at 5177 levels and after that nifty has support at 4800 levels.
The Neckline which was a Support shall  now play the role of Resistance.
The head and shoulder pattern does give an initial bounce back towards its neckline, so a short term target of 5340-60 can be expected from lower levels.

RELIANCE INDUSTRIES - " Make it OR Break it "

Everybody likes cheap stocks which promise to deliver in a short time span. Right now we dont need to look far to find one as one of the biggest companies is available at a 52 WEEK LOW. Reliance Industries has taken a constant beating by the investors and bears on speculations of companies strength to perform and deliver to its investors as one of the largest companies in the world.

The purpose of the chart is to give a brief and real picture about what a company has been doing overtime. The chart in this case gives us the magnitude of how bearish institutions and retailers have been on this security. As seen on the daily price chart - The stock has already broken its previous support of 880, we see that the last level of trend line support can be found in the range of 855-860. If broken, we could see the heavyweight take down the entire index along with itself.
The stock has been in a consolidation phase for the last 2 years moving sideways but losing its grip and value over time. RIL has especially been a target for short term investors who have continuously bought and sold the security keeping 10-15% margin as profits.

Keeping in mind our previous post about the NIFTY LEVELS we do expect the markets to go upto 5700 levels. If what we think and if our theory is right we do expect RELIANCE INDUSTRIES to start moving up from this level along with the index.

     
We have recommended a BUY to our clients @ the 850 levels and in our view the stock should again give its investors a 10-15% margin. We however do recommend that after gaining certain profits investors should watch how the markets react at the 5700 levels and sell stocks just to be on the safe side.

SHORT TERM TARGETS 904 , 929, 970 (5700 LEVELS)

Strategies for 17th June

Nifty shall on friday operate in a downward trend.

Sell at 5420 levels SL at 5440 Target 5380-60

Once it hits 5360 levels long positions can be taken for 5440-5460 levels 

SELL NIFTY

Nifty today will touch 5590-5600
Trading Strategy
SELL 5600 CE @ 92  STOP LOSS 98
MAX LOSS PER LOT 300
Rebuy @5540 

HDFCBank & NIFTY UPDATE

HDFC BANK blasted today closing at 2399.55 and touched a high of 2408. Although 2 of our targets of 2350 and 2400 have so far been achieved the target of 2475 still remains which we hope to achieve later during the week.

For tomorrows (June 1st) trading session - 

Based on todays close HDFCBank looks good above 2374. If traded above this level for sometime we could see 2433 and above that 2460-65. However maximum profit should be booked at the first level. A strong support stands at 2340.

As per our projections todays High could be 2455 and Low 2357

Regarding our previous post of Nifty triangulating to 4800 on the 26th of May, we had hit a low of 5328 and closed at 5348. Since then Nifty has gained  212 points in 4 trading sessions and closed at 5560 on the 31st of May. 

However we would like to point out that the corrective B wave consists of 3 sub-waves. We may experience some sort of a correction in the coming trading sessions before hitting 5650-5690 levels. A very strong resistance is seen at 5700 levels where we think the Nifty shall eventually give traders the final exit chance. 5700 is also the 6th point which concurs the symmetrical triangular pattern.

Please be advised if any kind of actions or short positions are assumed work with a strict STOP LOSS. 

Are we Triangulating to 4800 ??

  

On the 25th of May, we discussed the possiblillity of the Nifty coming within a symmetrical triangular pattern. As assumed the Nifty did touch a low of 5328.7 yesterday and rebounded back to close on at 5348.95 

As I write Nifty today has rebounded and has been trading @5398 at 1137 AM. 

The common rule requires 2 major confirmations before the assumption of a symmetrical triangle.

1. The second high should be  lower than the first high with the upper line sloping down.

2. The second low should be higher than the first low and the lower line should slope up.

The pattern generally forms with 6 points before a break out occurs.  

Drawing major trendlines our upper limit before a down trend begins would be 5660-5690 . A short position could be assumed with a stop loss of 5750

With an Elliott Wave Outlook  the rally from 5177  (WAVE C) was described as an ‘X’ wave separating two sets of three-wave down moves. We should now definitely try to hold 5600-5650 as a safe haven and exit positions on every recovery to sell before a move down to 4800