Broad Price AREAS for NIFTY

Defining Price AREAS for the Nifty

During the course of daily analytical reviews and regular tracking of the Sensex / Nifty and (nowadays) even Dow Jones and the Asian markets; let us visualize the market from a slightly higher plane.

Please refer to the above chart of Nifty (as of April 5)

Since the Jan 21st fall, we observe (some what with a little surprise) that the Nifty has in-fact remained within the movement of the two days of the crash ( Jan 21st and Jan 22nd.)

Also for the past more than two months, it has remained within the range of these two days,

On the above chart , I have divided the price movement for the past two months in to two halves in a diagonal manner to provide us an idea of price movements and price areas.

Secondly i have provided a horizontal line depicting the mid-point of the high and low of the two days of January crash.

We observe that more recently Nifty is spending more time below the mid-point of 5075 points. Till the time this level of 5075 is broken on upside, there should be inherent weakness. The first indication of 'some' revival will be on Nifty closing above 4900.

As per our earlier analysis, the Nifty low of 4450 remains 'crucial' support level in the medium term and the bais is currently towards further down moves.

While the above analysis is true for the Nifty , the Sensex has already broken below the two days (crash days) low and hence may be acting as a precedent for the Nifty.

Surely time will tell.

CA Rajiv D Khatlawala