Market Next Week.

A Knee Jerk Reaction?

 

I had last week mentioned about a rally towards 5160-80 which occurred even though it went a short of the target.

 

But, on Jun 1, seeing the formation of the Inverted Head and Shoulders (I H &S), I had revised the target to 5300-50. Now that, NIFTY daily chart has already confirmed the I H &S by closing above the Neckline. It is all set to move to the 5300-50.

 

Now the real twist comes. On Friday DOW underwent a sell-off due to the week Job data together with Hungary’s Economic crisis. We will see what happened then. Let us look at DOW’s levels. The lowest point of the drop could not pierce through the point B. Also, the drop adhered to the target of the swing from X to Y. All this indicated that there is less chance of an additional fall in DOW on Monday.   But… if the European crisis deepens, it will spell disaster. 

 

Definitely there will be a knee jerk reaction across Asia, when Monday Markets open. To see what is the possibility for NIFTY on Monday. I have added a 30 Min chart.  This shows me that the possible drop may not exceed 5030-5002. There is every chance that markets may rally back to the place it originally closed on Friday or even higher.

 

Note that if the Euro crisis deepens, this analysis will be invalid and will be back to square one. Hence cautious approach is definitely called for.