The Nifty remained sideways on Monday and has opened in down gap near 4250. In fact on Friday I had mentioned that the Nifty will try to fill the GAP made on the 'Vote of confidence' Day and this has happened today morning (Tue).
Turning our focus on GOLD at the current juncture, it makes interesting study on how trend lines can be useful in technical analysis.
In the above chart, you will observe that in the current corrective fall in GOLD from the high of 13500 levels, it has taken support at the resistance line drawn from the high of Mar 17th. This is a classic case of resistance becoming support price level.
Unless this 'resistance-turned-support' line in broken on down side, we can expect up momentum.
So any long positions should not be exited unless this level of Rs 12500/- is broken. Moreover, other indicators (not shown in the chart) suggest that a close now above Rs 13050/- will be further positive for the security. In dollar terms , a close above $935.50 will be positive and $920 will be the crucial support level.
And don't forget the general inverse relationship between Gold and equity!!
Happy trading !
CA Rajiv D Khatlawala
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