V-Shape recovery in progress for Nifty. Today we will try to study Nifty chart on an hourly scale. Hourly scale means the candles that we see in the chart represent nifty movement for 1 hour each. Each candle represents 1 hour movement of Nifty. Now let us watch closely what happened here.
1) We can see that after reaching a high of 25448 on September 25th. Nifty declined sharply. Then it consolidate in the range of 24587 and 24748. After this it moved upwards and hit the mother line at 24867.
2) As we know when the stock or index is below the Mother line the line acts as a resistance. Next 7 candles could not give closing above this line as it was a strong resistnace.
3) During the last two hours of trade we got a closing above the mother line thus it has now become a support. right now the Mother line is at 24846. So this level will be our immediate support. Below this level other supports will be at 24748 and 24587.
4) The Father line resistnace is at 24922 this level will be our immediate resistance. If we get a closing above this level the next resistances will be at 25032, 25139, 25255, 25358 and 25451. If and when we get a closing above 25451 it will be a strong Bullish breakout.
Supports and resistances other than Mother and Father line are derived by historical peaks and valleys. Mother and Father line/Support and resistance are nothing but exponential Moving averages. Mother line is 50 EMA and Father line 200 EMA.
As this is an hourly chart, Mother line is 50 Hours exponential moving average and Father line is 200 hours exponential moving average. In case of daily, weekly or monthly charts. The EMA will be 50 days, weeks or Months respectively.
To know mover about patterns such as V pattern seen here or Mother Father and Small Child theory (To understand the role of Mother line and Father line) or to be able to draw resistances and supports based on historic peaks and valleys you can read my book THE HAPPY CANDLES WAY TO WEALTH CREATION. The book is available in Amazon in paperback or Kindle version and is rated 4.8/5. This book teaches you Techno-Funda investing. (Techno Funda investing means Knowing which are Fundamentally strong companies and investing / booking profits / staying invested in them based on Technical analysis). The book has some more unique features like rating a stock with the help of Happy Candles Number wherein you can give a stock marks out of 100 based on Techincal and Fundamental analysis you have learned by reading it. Thus you can know if the stock is currently investible or not based on the marks it scores out of 100. The book also covers various aspect of behavioural finance. Lot of people who have read the book consider it as a hand book to equity investing. Buy the book you will not be dissapointed as the book is reasonably priced. Search by the key words The Happy Candles Way to wealth creation and you will get it.
Disclaimer: The above information is provided for educational purpose, analysis and paper trading only. Please don't treat this as a buy or sell recommendation for the stock or index. The Techno-Funda analysis is based on data that is more than 3 months old. Supports and Resistances are determined by historic past peaks and Valley in the chart. Many other indicators and patterns like EMA, RSI, MACD, Volumes, Fibonacci, parallel channel etc. use historic data which is 3 months or older cyclical points. There is no guarantee they will work in future as markets are highly volatile and swings in prices are also due to macro and micro factors based on actions taken by the company as well as region and global events. Equity investment is subject to risks. I or my clients or family members might have positions in the stocks that we mention in our educational posts. We will not be responsible for any Profit or loss that may occur due to any financial decision taken based on any data provided in this message. Do consult your investment advisor before taking any financial decisions. Stop losses should be an important part of any investment in equity.
