NIFTY for the week of 10-Dec-2007

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NIFTY is again standing at cross-roads, uncertain about where to go. Two levels are very important at this juncture. The resistance level of 6000-6020, which NIFTY has successively failed to breach and a support level of 5900-5920, which is successfully tested by NIFTY once.

In the last session, bulls tried hard to break the resistance barrier of 6000 but they failed, though they were successful in keeping the NIFTY above previous close. Bears too tried hard to take NIFTY below previous close but failed again. A good sign here is that bears failed to form a doji.

Going by the technical indicators, we have a mix of scenario for the coming week. The accelerated volumes in the first few sessions of December are maintained, the money is flowing in the market (OBV is advancing). On the other side NIFTY is standing at the peak of resistance level (which it could not breach for the last couple of times), liquidity is drying (Bollinger bands are shrinking), bullish sentiment is weakening (+ve ADI is on decline and –ve ADI is neutral). So what to expect with such mixed sentiments in play?

Our take would be to wait a watch for the first session on Monday. If NIFTY crosses 6000-6020 level and nestles at a level above that then we are surely entering a bullish trend. On the downside we have a strong support in 5900-5920 range, if this support is breached then NIFTY can see a level of 5750-5800.

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