Corey Rosenbloom: India’s “Nifty 50″ Stock Index currently faces a key inflection support level at the 4,800 level. Let’s take a quick look at the Index and plan for potential action at this visual chart level.
First, let’s see the Confluence Support Line that develops from the Weekly Chart:
Again, a quick glance shows the 4,800 Index level as the visual focal point for potential confluence support on the chart.
This builds from the flat 200 day Simple Moving Average currently resting at 4,819 and the 38.2% “Bull Market” Fibonacci Retracement at 4,873.
It’s worth noting that Confluence Support Levels are not mystical levels were price is required to reverse; instead, they are levels that often drive additional interest and trading activity that could shift the supply/demand balance.
In other words, buyers have a low-risk, high-reward potential opportunity that could spark a bounce here potentially to target at least 5,250.
However, if collective selling activity is stronger that collective buying activity at this key level, then it would open the index to target lower support levels such as 4,500.
In this way, we follow price as it trades relative to key inflection areas – the index has the potential for bullish movement above 4,800 or else bearish continuation under 4,800 to respective targets.
Let’s see a closer picture on the Daily Chart:
The Daily Chart again highlights the 4,800 region – not the exact number – as a key inflection or turning point for price.
The Index reversed initially higher off 4,750 then traded minimally under 4,700 with positive momentum divergences ahead of a power-rally/bounce in early 2012.
Consider the 4,800 region to be a very important reference level as price (buyers and sellers) again interact at this key level.
Short-sellers may decide to take profits (exit positions) near this level while buyers may decide to put on new swing-trading positions.
The interaction here – and whether sellers can collectively break this support level – will be key in playing the next few weeks in the market.
Related: PowerShares India ETF (NYSEARCA:PIN), Market Vectors India Small Cap ETF (NYSEARCA:SCIF), EG Shares India Small Cap ETF (NYSEARCA:SCIN), EG Shares India Consumer ETF (NYSEARCA:INCO), EG Shares India Infrastructure ETF (NYSEARCA:INXX), WisdomTree India Earnings ETF (NYSEARCA:EPI).
My name is Corey Rosenbloom, CMT (Chartered Market Technician) trader, educator, analyst, and I am excited to share with you my experiences studying and trading the markets and to hear from you regarding your experiences, challenges, and frustrations, and successes. My goal is to create a community dedicated to reaching out to those who have been burned by the market or are anxious about risking their money to make money in the stock, options, or futures markets. Together, we can share strategies and learn how to overcome crippling fears that keep us from achieving our highest potential.