Nifty is nearing the crucial support of 5550, 18 January 2011

I have been mentioning 5550, almost for the past one year. Earlier in 2010, it struggled to move past that level. Nifty retraced two times before testing that level. On the third attempt on september 2010 it moved past that crucial level.

As it failed to move above its all time high, it is being expected to test the next crucial level of 5550. Now Nifty is in the striking distance of 5550. Nifty is likely to bounce from this levels atleast for the short term. If 5550 is broken without a pullback from here, the fall is likely to be very steep.

A pull back from here could take the Nifty towards 5900. Instead, 5550 is broken comfortably, a steep fall towards 4700 is likely in coming weeks. In that case, the medium term top would have already formed at 6340 level.

The break of 5550 would also confirm long term bear market for Nifty. If that is the case, then cash is the king.