We had a second consecutive day of Spot closing above 3100. Personally, respecting 60min's over-bought status & intraday breakout failure, I booked out half of my positional longs at around FUT 3130 level.
The short term trend is still up. The overall system & 30/60min timeframe charts suggest trend reversal on break and close below Spot 3056.
But, if seen through a wave pattern, making higher-lows higher-highs in 30min / 60min intraday charts, then the previous higher-low to be considered as trend reversal point is Spot 2937.
THIS WILL CHANGE IF SPOT MAKES A NEW HIGH ABOVE 3142, AND ONLY THEN WILL THE PREVIOUS HIGHER LOW (SAR) STATUS SHIFT TO SPOT 3056.
So, if tomorrow or later in this week, Spot breaks 3056 without making a higher high above 3142, then I may be hesitant in making a short position (or else, would do it on intraday basis only & wait to see the reaction at Spot 2937.
The intermediate trend turned up on break & close above Spot 3110. Today also, Spot also managed to close above 3110.
The ascending triangle setup, as highlighted in the above chart, is the key for the intermediate uptrend. The whole setup breaks when the prev. higher low of 2813 breaks.
Hence, I would prefer to buy on dips near support regions like Spot 2937 mentioned above.
If tomorrow, I am able to get Spot 3160-3200, then I will book profit in 1/4th more position, respecting the RSR status of 3200 band.
As Nifty Future has made an outside day today, as per textbook, FUT 3148 & 3057 are immediate breakout levels on either side.
As quoted above, SPOT / FUT 3056 became the intraday SAR level during 7-Jan, thanks to:
1. SPOT making a new higher high above 3142 at 3147, thus cementing the status of 3056 as the key previous higher low & as the new trend-reversal level.
2. FUT showed the real effect of the outside day / bearish engulfing bar, as soon as lower range 3056 broke down.
Ok, so the short term trend has turned down with the break & close below 3056;
the intermediate uptrend has its SAR with break & close below 2813.
The contracting bollinger band & the highlighting of 3200 as a strong RSR band along with over-bought status in higher timeframe charts, proved quite a lot of resistance & selling pressure only intensified with break of Satyam news.
What do we have now (besides being in short position since 3056 level)?
50% Fibonacci retracement level of 3147-2888 is Spot 3017.
Even 20DSMA lies in the vicinity of 3000.
So, a close above 3000 should caution the bears.
But, in the same vein, fresh shorts can be initiated near 3000, with stop at 3050 (61.8% retracement level)
Upcoming support levels are in the range of 2850-70 (50DSMA). I'll look to cover 1/2 of my positional shorts in this band, and then wait to see the reaction at 2800.
By the way, now SPOT has made a bearish engulfing (outside day bar) on 7-Jan. So, intraday break of SPot 2888 (LOD of 7-Jan) should ideally target the vicinity of Spot 2850.
