Dec
28Nifty: The moving average to watch
Filed Under (Market View, Nifty Observations) by Deepak Singh on 28-12-2009
Which is one level/moving average that has acted as the most consistent resistance/support level for Nifty in last couple of years? What do footprints on charts suggest?
Answer: 20 week ma
It’s quite simple. Here’s the Nifty weekly chart and you can see for yourself why I think so.
Source: ChartAlert (www.chartalert.com)
As you can see in the chart above - during 2008 fall - the 20 week ma consistently acted as resistance and post breakout in March - the same level consistently acted as support in 2009. The 20 week ma as of today stands at 4917.
This is not the first time I am sharing this level with you. Here’s one article I shared last month - 20 period moving average. Prior to that - one article I shared in July 2009 - Nifty: Where is the FTP Support?
What does this mean?
Stock prices have memory of where its support and resistances are; and it keeps bouncing/stalling from/at that level.
The job of market technician is to find that support/resistance (S/R). And S/R is not fixed for all the stock/market and market keeps changing its support and resistance from time to time. So, it’s not that simple and fixed on where the support and resistance lies.
In last couple of years, 20 week ma has acted as the level to watch; and we should follow it till market stops following it 
Let me know how you found this article. Please suggest how I can make this notes more useful to all of you.
Disclaimer - The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
Fabulous article and I love reading your articles.
20 MA one is very good.
Keep sharing.
Nifty on daily basis support can be 90 Simple Moving Average, which is same as 20 Weekly Simple Moving Average.
it will take more than 250 points from the bulls if it reverses from here which is tough to bear by small investors. Hence, any nearer important support to spot reversal will be of benefit. Is there any?
“In last couple of years, 20 week ma has acted as the level to watch; and we should follow it till market stops following it”
Question is how to understand beforehand that the market has stopped following IT?
When market will not treat that level as support couple of times..
Thanks deepak for this chart.
Thanks for 200 WMA,
Btw do 200 WMA on nifty actually works??? has it been usefull to give nifty’s direction?? do u recollect any time it has been usefull indicator??
200 week moving average worked very well in 2000-2003 bear market…but not since then
Good research . This is to put on record my sincere appreciation of your efforts in research about Nifty which benefits me a lot. Pls keep it up.