Its the summer time and Shorts are in trending on the youths while traders are trending with NIFTY’s short covering. Yesterday we show a reversal pattern “Morning Star” (circled in graph) which is a sign to an end of bears and start of bulls. After long time NIFTY has closed above short term moving averages (Yellow-5SMA , Green 10SMA) which is also a sign for some bullishness on markets. Indicators on daily chart are highly oversold which may also bring some upside movement. Why am i calling it Short covering and not bull run?? Its because fundamentally we dont have any good news factoring in nor bad news , its just traders are gonna cover their shorts next week due to expiry. Petrol Price hike was a good news for OMC’s which was the reason for the upside move in oil stocks in last two days. Listed Companies are positing mixed results within the same sector. We dont have any major event lined up next week so we may go long for a week with stock specfic.
On weekly chart market has closed exactly at resistance point and its important for market to open positive and remain above 4936 for nxt week. Next Thursday being last day of the month, it is also imp for us to look on monthly chart. Monthly chart is said to be in bullish mood since february this year. If market closes above 4900 nxt thursday then we can be bullish on NIFTY based on monthly chart.
Strategy: As i mentioned in my last post that people should keep a stop loss on shorts at 4936 and we achieved that point on NIFTY today. Now risk takers can go long the NIFTY at CMP with tgts of 4975,5030,5090 where as safe traders go long only above 5170 which is considered to be boundary line for short covering.