Software & Finance

Nifty Feb 2011 Technical Forecast

Jan 31, 2011 - Nifty Closed today at 5505.90 which is down by 9.81% in one month (compared to Dec 31st 2010 Close of 6105.10). January month low was set on Jan 31st at 5416.65 just after the market open and January month high was set on Jan 04th at 6181.05.

FYI - Nifty set its 52 weeks annual high of 6338.50 on Nov 5, 2010 and its 52 weeks annual low of 4,675.40 on Feb 08, 2010.

What happened in Jan 2011?

Compared to my earlier update on Jan 2011 Forecast, it did break consistently 10, 21, 50 and 200 days Exponential Moving Average. Once 200 days moving average was reliably broken, then we need to look for the next support level. Nifty was looking for the next support levels which was set on Aug 31 2010 at 5402.40.

Interesting Nifty touched 5416.65 which is just 14 points above the next support level and started bouncing back. Currently Nifty was trading in between its Aug 31st 2010 support level and 200s days moving average.

Nifty to bounce back in Feb 2011 towards 5678.41 and 5854.516 ?

So far there were no retesting happened in Nifty in January month of downturn. 200 days moving average was a powerful resistance which was broken easily and moved on the next support level. I strongly believe this month there will be retesting on Nifty Technical Levels.

Next has got very a strong support level at 4806.75 set on May 25, 2010 and 4718 set on Feb 05, 2010. Nifty level 4806.75 on May 25, 2010 would be considered as a double bottom so it is very much unlikely the market will do down to these levels in the short run.

In Feb 2011, Nifty to bounce back and enjoy a nice rally to catch up its 200 days EMA of 5678.41 and I also believe market will pause couple of days before it touches its 50 Days EMA of 5854.516.

Going above 5854.516 on Nifty is unlikely in the short run.

My long term view on Nifty is bearish even though this month we may see a significant bounce. If you are holding any long positions, you can wait until Nifty to touch its 200 days EMA which is 5678.412. If you prefer you wait to catch up 50 days EMA. After that you can liquidate your positions. It is also good idea to put stop loss order to liquidate your positions, once Nifty touches its 200 days EMA.

Is it a good time to go long as per Nifty Technical's?

For conservative and long term investors, NO. For speculators and day traders, YES.

Conservative and long term investors may have to wait until Nifty touches its deep support level of 4806.75 at least.

For speculators and day traders, it is a good idea to go long on Nifty. Try to protect your investments with hedging (buy put options). Also Market has come down rapidly in the last one month, market may face a wild swing between either directions to look for support levels and resistance levels.

Technical Indicators

10 days EMA: 5667.54
21 days EMA: 5756.339
50 days EMA: 5854.516
200 days EMA: 5678.412

Next Resistance Levels:

200 days EMA: 5678.412
50 days EMA: 5854.516

Next Support Levels:

strong support level at 5402.40 set on Aug 31 2010
strong support level at 4806.75 set on May 25, 2010
strong support level at 4718.00 set on Feb 05, 2010

Posted on Jan 31, 2011