Nifty having retraced upto the golden ratio i.e 61.8% (5648) of the entire fall from 6338 to 4531, witnessed a selling pressure of 3% from the high of 5630 to 5460.
I had mentioned in my report "Boom after Gloom" sent on 21/02/12 that, Nifty could possibly retrace to 5200 levels as the move from 15th February 2012 was an euphoric one on back of extreme optimism and the daily RSI also had gone into an overbought territory.
As shown in the hourly charts below, Nifty has breached below an important rising trend line. And the head & shoulder formation indicates that, a breach below 5460-50 levels would trigger another round of sell off which will drag the index down to 5310 levels.
This does not mean that Nifty is entering into a weak territory. And it is not out of positive trend yet. There are important support levels like 5428 5399 5377 and 5360 levels from where buying could emerge. And also, it will give a sharp bounce back to 5430 5460 and 5530 levels on achieving the head & shoulder breakdown target of 5310.
For tomorrow, Nifty will face resistance around 5518 and support around 5460-50 trading above 5518 it will test 5545 5565 5600 and 5648. Trading below 5460-50, it will come down to 5428 5399 5377 5360 and 5310.
SUPPORT 5460 5450 5435 5399
RESISTANCE 5518 5545 5565 5600
Rohit Saxena
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