- January 2, 2011
- Posted by: Ramki Ramakrishnan
- Category: India
In a recent update, I had pointed out that traders should wait for the imminent recovery to run its course, and join in the selling when we eventually get an overlap of the 6069 level on the way down. At the time of writing that comment the NIFTY was around 5944 levels. Today it has already traded at 6147, and many readers are asking whether we should sell if we get an overlap of 6069 from here. I think if we get a close below 6069, that is your first big clue of a possible sizeable downmove. Two closes below 6069 will make me quite bearish, but as always, one needs to have stops on every trade. So if you are choosing to go ‘short’ on a close below 6069, then you should protect yourself with a stop above the high seen in this run up. The target for any decline then will be around 4700. Ideally the downmove should start after we reach at least the 138.2% projection level of 6241 or better still the 161.8% level of 6330. As the latter level will be nearer to the previous significant high, one might even look for a so-called failed 5th near there. To sum up, any overlap of 6069 will be more significant if it comes from levels above 6240. Good luck!