Nifty = STOP Sign at 4100-4120 zone It seems market has made up its mind to not cross 4100-4120 for time being.-Deepak singh http://www.stateofthemarket.net/index.htm What happened today? - Nifty managed an impressive gap-up today and then traded sideways around the resistance level of 4100-4120 for major part of the trading session today. A sideways move around resistance is generally considered very positive but the way market came off in last 30 min was extremely disappointing. It clearly tells us that market needs to do lot more work before it can breakout above 4100-4120. One thing is certain - The way market has come down today from 4100. 4100-4120 may now be tough hurdle for market to cross and next big move will come only above this level.

Context- The current set up means Nifty is in the trading range of 3850 and 4120. A fresh upmove in the nifty may come only above 4120. Similarly, a fresh down move may come only below 3850.

Nifty continues to be in downtrend as long as it trades below 4325-4350. Last week, Nifty broke the trading band of 4120 - 4325 on the downside. That is why Nifty is encountering such a strong resistance around 4120.

The chart below illustrates the breakdown of trading band - 4325 - 4120 on June 30 2008

What Next? - The financial markets are generally unpredictable. So, one need to have different scenarios. There are following scenarios probable -

Scenario 1 – Nifty opens down, and takes support around 3940 and then may rally to 4120

Scenario 2 – Nifty rallies all the way to 4100-4120 and then cool down once again

Scenario 3 - Nifty slips below 3940 and tumble once again to 3850

It seems a breakout above 4120 may take few more days if that has to happen.

Trading Approach -

• Short around 4100-4120
  <
• Buy Nifty near support levels of 3930-3940

Levels to watch out are -