16th Mar 2009: Bear trap effect continues

As discussed yesterday, NIFTY made a powerful up move today and this is in continuation with the bear trap made on Friday the 13th. There was not even a pull back till 2695 levels and NIFTY also formed another strong bear trap at 2719 levels which also happens to be the previous close. A move till 2734, the then high and also a key resistance level was made and NIFTY took support at that level and went on a strong upmove till the next level of 2765 and also closed well above that level, closing above its 20 DMA after 15 sessions. A strong 3 white soldier pattern has been formed.

The immediate next move will be towards 2810 where its 50 DMA resides currently. Any upmove beyond that can be retraced to the 50 DMA level sooner or later and so it may not favour both bulls and bears. Further resistance levels are 2845 and 2868. This short term rally will most probably be not able to move beyond 2868 and so short positions can be entered if it reaches that level.

2734 will act as a good support level and NIFTY is unlikely to test that level.