Nifty Technical Analysis: holding 50-hour EMA

India’s Nifty 50 is trading in the red, but is defending the 50-hour EMA 10,445.

The bullish hammer reversal confirmed on Friday indicates scope for a corrective rally toward 10,700-10,800 in the next few days.

Therefore, I would be a buyer on the dips. The bullish outlook would be invalidated if the index closes today below the downward slopingĀ  5-day EMA.



Goldman Sachs – Bullish invalidation below 221 levels

Positive RSI divergence + bullish symmetrical triangle breakout signals potential for rally to 245-250 levels. The second quarter revenue has failed to meet expectations…EPS adjusted came-in at $3.95 vs. $3.51 expected.

Better-than-expected EPS is good news. Stay on the long side as long as the prices stay above 221 levels.

Daily chart


21,545 is the key level on the Dow index

Daily chart

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The trend line has come to the rescue again… but the RSI is overbought and has been so for the major part of last 8 months… It was last overbought in 2013.

Markets are cheering Yellen’s slightly dovish take on interest rates, however, once again what is being ignored is the reverse QE = Balance Sheet runoff.

Indecision written all over Dow Jones chart

Weekly chart – Multiple candles with long upper/lower shadows signals indecision at record highs. The rising trend line coming from Feb 2016 low & June 2016 low is seen offering support at 21,310-21,300 levels. If breached, it would signal the index has topped out at least for the short-term.

However, don’t bet on the short side if the index breaches the rising trend line via sideways action…

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S&P 500 – Trend line hurdle caps gains

Deutsche Bank described today’s US NFP and wage growth numbers as a ‘classic risk-on’ data, however the trend line hurdle is capping gains. Take note of the fact that the index closed below the trend line yesterday. I would go short on the index if the failure at the trend line is followed by a break below the session low of 2407.

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