New Weekly Structure and Daily Fibonacci Support Update for India Nifty 50 Index

Jun 14, 2013: 10:39 AM CST

Even if you’re not a follower of India’s stock market (charted here as the “Nifty 50” Index), the market is forming a very interesting weekly chart structural pattern and challenging a Daily Fibonacci Retracement level.

Let’s take a look at the larger picture and focus on the immediate levels to watch in the index:

It’s not often we see a large-scale “V-Structure” or Mirror Image of Parallel Trendine Channels as we’re seeing on the Nifty index, and I took the liberty of highlighting the late 2010 to early 2012 downtrend in red and the remaining current uptrend (still in motion presently) in green.

Note the trendlines that contained the weekly structure between the parallel trendline pattern (almost like a classic rectangle with a directional bias).

For reference, the trend reversal signal was a breakthrough above the 5,350 high in early 2012 (first higher high) that also broke the falling trendline pattern.

The next swing was the first higher low into 4,800 which set the stage for the structural reversal.

We’ll be looking for any similar downside trendline breakdown under 5,600 initially that carries under 5,500 (the 2013 low) for a sign of weekly trend reversal, which makes the 5,500 area the key focal reference level for investors and swing traders.

For now, we’ll note the index into the lower rising support trendline channel and the prevailing intermediate (weekly chart) uptrend in motion.

The Daily Chart provides a fresh look at a key Fibonacci Support Level to watch at the moment:

I drew a short-term Fibonacci Retracement grid from the mid-2012low to the recent May 2013 high and note the immediate support level into 5,700 (the 38.2% Fibonacci Retracement is 5,672).

Traders should monitor this level very closely for any sign of upward bounce or rally up off the key short-term support level.

This sets up a game-plan or trade plan based on this level:

  • A failure here (a breakdown cleanly under 5,670) suggests that the index will trade lower to the 5,500 critical support level;
  • A successful bounce/rally up would continue the higher frame bullish trend which suggests that the index could trade back to 5,800 (the underside of the rising 200d SMA) or even as high as 5,900 (the crossover of the 20 and 50 day exponential moving averages).

Again, a movement under 5,500 would break the weekly (intermediate) trendline and reverse the short-term trend to the downside with a lower low.

For the moment, continue to focus on the interaction (buying and selling pressure and the outcome of a “bounce or a break”) at the current confluence level into 5,700.

Corey Rosenbloom, CMT
Afraid to Trade.com

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Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

2 Comments

2 Responses to “New Weekly Structure and Daily Fibonacci Support Update for India Nifty 50 Index”

  1. gourav Says:

    Thank you Corey Rosenbloom for analysing the NIFTY.Its very useful for someone like me who is from INDIA.I always follow your blogs but as they mainly covered US stocks I gain knowledge but this post will also help in making profits 🙂

  2. Bhupesh Says:

    Thank you Corey for analysing the NIFTY.Its very useful for someone like me who is from INDIA.I always follow your blogs
    I have been waiting for so long to view your update on Nifty..