Nifty Trade Update - 24th Dec

Update 10:07 AM:  Nifty CMP  10715 - Hold short positions


Nifty continues to be weak. Hold short positions as advised earlier, nothing is required to be done as of now

Update 2:30PM  Nifty CMP  10690 - Hold short positions

Nifty continues to be weak and showing good momentum on the downside. hold on to existing short positions ( we might even initiate more shorts soon). But pls don't get carried away and leverage, keep your risks managed at all time


Update 2:45PM  Nifty CMP  10684 - Sell ( Initiate shorts)
We have Trade-1 short open @ 10858. More shorts can be added around CMP

Nifty View: Update for 24th Dec 2018

Near Term Trend:  ↔️ (Sideways/with a strong negative bias)


Market Update: Nifty opened slightly positive around 10950 shrugging one more overnight carnage in US stock but today was different. Nifty couldn't display the strong character its been putting up since last few days and crashed 200 points to close around 10750 levels. I did mention in my post yesterday that we should not read too much in Nifty outperformance and sooner or later both indices ( US and India) will line up.

I have been expecting this move since last  2-3 days and have been saying that markets seems to have matured and there is a strong likelihood of down move from these levels. I marked the move from 10k as diametric pattern which is in its last leg (G). G might have completed both time wise and pricewise yesterday. We went short yesterday expecting a move like today but it didn't materialize so we exited however we entered shorts today again around 10860 levels ( you may want to refer to 'Nifty real time trades' page for details). Idea was to enter below yesterdays low ( 10890) level however the fall was steep so we got a lower entry point around 10860 only. But when you are doing positional trading 10-20 points shouldn't matter to you.

Having said all this can we say that near term trend for Nifty has now changed to down? Answer is No, not yet. That's the reason I am still showing the 'Near term trend' as sideways. There is a strong probability of Nifty changing the trend to 'down' from here but so far it hasn't changed. Not even after 200 point fall today. See in last 8 days Nifty has had just one bad day and one bad day cannot dictate the course of market for short term. Nifty can be in super bullish trend and yet it can fall 200 points and recover. Similarly one day of 200+ move in bearish trend doesn't mean trend has changed now.

So our overall stand remain same for now. We have been saying that there is a likelihood of a reversal from these levels and Nifty today has taken one step towards confirming that. It has very good support at 10700-750 zone. Continuous fall below this level with momentum will give us the confirmation we are waiting for.

Some are asking why we exited  shorts yesterday even though the SL was not triggered? Please note that Nifty trend had not yet turned negative yesterday, so holding on to shorts  required a strong negative momentum which we didn't have so we exited. Today we have it so we are carrying. Doesn't matter if we lose 70-80 points in the process. In the long run this rule will help you cut your losses.

Food for thought- If my chart reading and wave counts are correct then we are looking at a very steep fall and when I say steep I mean every likelihood of Nifty breaking 10340 in next 3-4 days ( not exaggerating).


Trading recommendation: Entered shorts around 10860 levels today and carrying. Will short more once I get secondary confirmation till then just hold on to your existing shorts. If some one is long then pls exit once Nifty start trading below 10700 consistently.

Have a nice weekend! Enjoy and take care.
 

Nifty Trade Update - 21st Dec

Update 10:27 AM:  Nifty CMP  10858- Sell

We have been expecting nifty to make a top around this area ( like mentioned in yesterdays post)

Note: Spot prices mentioned

Update 11:30 AM: Nifty CMP 10835- Please note nifty has not yet given any crossover sell confirmation yet ( inspite of this 100+ point fall today). Short call is merely on the basis I have been mentioning in my posts. We carry shorts if trade is moving in line with expectations or we exit ( like we did yesterday). So it could be slightly risky as we are trying to call out a top in markets (something which one rarely gets right). Overall trend of the market changes to down only when 10700-10720 range is taken out.
so just to reiterate, I see a strong possibility of a reversal hence these short calls. Once I get confirmed signal then we will initiate more trades (if you want you may wait for confirmation).


Update 2:25PM: Nifty CMP 10770 - Hold shorts for now. Will update if anything has to be done.  So far trade is moving in line with my expectations. (less Risky traders might want to book part profit)


Update 3:15PM: Nifty CMP 10740 - Carry Short for next week (less risky traders can book profits)

Enjoy and have a nice weekend. Trade well, Trade wisely.

Nifty View: Update for 21st Dec 2018

Near Term Trend:  ↔️ (Sideways/Corrective/Near maturing)

Market Update: Nifty opened with a gap down on the back of overnight fall in US equities and weak Asian markets but as the trend has been recently, Nifty outperformed each market and closed almost at par.

I have been expecting Nifty to make a near term top around this level and hence went short in the morning (10AM) around 10932 levels (Nifty did fall to around 10880 levels after that)  but overall movement of Nifty was not as per expectations so we exited from shorts at almost same price around 3pm. Even though our SL was a 'new high' and it was not triggered still a strong trading above opening rates suggested a bullish overtone. In such cases its always best to exit.

Nifty has still not given any negative crossover signal and remain very much in +ve trend. However and as per my view and analysis there is  probability that a top could be made around this area either now or in next 2-3 days so we have to be on look out for a trading opportunity on the short side.

For now Nifty has neither validated nor rejected my diametric assumption so there is still a likelihood of Nifty reversing from these levels, however if reversal has to come then it should come soon now else we are looking at extending this correction (both price wise and time wise). 

Even though Nifty covered almost all the losses intraday, it made a lower low and a lower high today which is an encouraging sign for Bears. Nifty now needs to close strongly above 10985 levels to negate the negative impact.

Another thing Favoring Bears is that Dow and S&P have broken their Feb lows already, so not sure if this outperformance by Nifty can continue for long. May be not today and may not tomorrow but soon both indices are likely to catchup ( Either Dow gives a strong rally or Nifty start falling)

Nifty Daily Chart

Trading Recommendation: Entered short around 10932 and exited almost at par. Need more sign of weakness to continue staying with short positions. 

Nifty Trade Update - 20th Dec

Update 09:55 AM : Sell Nifty @10932 CMP

As mentioned in previous post, considering various factors, this could be the topping area for Nifty with G leg of diametric almost completed. Short positions can be taken here with a SL of a new high.

Update 03:05 PM : Buy Nifty @10935 CMP- (exit from previous short position- no fresh buy)
Even though it fell to 10880 after our initiation,  the overall movement is not on expected lines so better to exit for now. Will enter again later.

Note: Spot price mentioned.

 

Technical Learning: Contracting, Ending Diagonals and Expanding Triangles

To continue with triangles, let me cover 3 types of triangles today. Contracting , ending diagonals or wedges and Expanding. Like all patterns, these too can be found in both Bull and Bear market. Bullish or bearish pattern is determined by direction in which prices are expected to move once the pattern is complete. In the below examples the prices are expected to reverse downwards hence these are 'bearish triangles' ( even though the prices in the pattern itself may be moving up). The shape of these triangles in bullish will be exact opposite i.e. 'A' leg will be pointing downwards.





Contracting, ending diagonals and expanding triangles

Important characteristics

Contracting triangles:

1. 'A' leg defines the overall range of pattern and is the biggest leg and rest of the legs are formed within same range
2. Each subsequent leg is smaller than the previous leg and the overall pattern forms a compressed or contracting structure (compressing price action just like a spring)
3. When the pattern is complete, the compression of prices stops (its unsprings) and gives a violent thrust
4. Prices move very fast once the pattern is complete
5. Buy/sell is recommended once the price breaches B-D support line ( line joining B and D leg of the  of triangle)

Wedges/ending diagonal:

1. Similar to contracting triangles only difference is that C leg though smaller than A leg, makes a new high.
2. 'D' leg is smaller than B and must finish above 'B' end point.
3. 'E' leg may or may not cross C but it should remain smaller than 'C'
4. Again, buy/sell is recommended once the price breaches B-D support line

 Expanding Triangle:

1. Most confusing of the lot as prices keep on expanding and making newer higher and newer low with every move
2. E leg is the largest and can be as much as 261.8% of C leg making it difficult to predict the end point
3. Price action that follows upon completion of triangle is very slow ( making it even harder to trade)
4. For entry point, either wait for  E leg to touch A-C line and reverse from there or if it crosses A-C line and enter below it again then buy/sell.
5. Though its not mentioned in the chart above, E leg can sometimes be smaller than D leg. In such cases wait for prices to go below D leg before initiating buy/sell

I know this can sound fairly complicated but trust me its not that difficult once you start recognizing patterns.






 

Nifty View: Update for 20th Dec 2018

Near Term Trend:  ↔️ (Sideways/Corrective/Near maturing)

Market Update: Market opened with a gap up and maintained the positive trend throughout the day and closed 60 points up at 10967 levels. Nifty today crossed the 10950 levels and made a new high. Still that doesn't change the overall character of the market and it remains a corrective leg. All up moves from 10K levels are carrying same characteristics and are pretty slow. Surely it can carry on for few more days but going forward Nifty might face strong resistance around 11000-11150 levels ( which is  also near the 61.8% of the total retracement). Technically speaking market can even retrace as much as 80% ( since the fall from 11750 to 10k was a double corrective).

Nifty might change trend tomorrow or might take few more days but the overall scenario and near term direction remains same. If my Diametric assumption is right then Nifty should turn back from these levels as both price and time wise the last (G) leg seems to be complete. Further rise in Nifty from these level would mean something else is cooking up. For now we are on the look out for a reversal point to short Nifty at appropriate level. I don't see much headroom for Nifty to go up from here but still we need to wait for a reversal point. However If we don't get a reversal point then we will wait.

Thing which are favoring Bulls right now are a) lower VIX and b) put call ratio ( its totally in favour of bulls right now) and c) shorts which got trapped at lower levels on negative election news.

Having said this, I still see very little value in going long at this stage  but that does not mean Nifty can not rise 200-300 points from here surely it can but still we prefer to wait.


Trading recommendation: No longs or no shorts at CMP. Wait for reversal signs to go short. As per my wave counts top could be in formation let markets validate or negate the pattern first.