Nifty setup: 5,000 mark strong hurdle for markets

The Nifty has retraced 90 per cent of the move from lows of 4,788 to the highs of 5,956. Such a deep retracement indicates the downtrend is strong and pullbacks, if any, will be short lived.

The extent of the bounce is capped after the sharp fall and prices are unlikely to test 5,050-5,070. So, 4,950-5,000 should be the logical targets now.
The 15-month declining trend channel and the green trend line (drawn from March 2009 lows and December 2011 lows) bisect each other just close to 5000 mark.

It would be difficult for the Nifty to clear the same in the next few weeks. Pullbacks to 4,950-5,000 should be used to initiate shorts with reversals are pegged at 5,056.