Nifty View: Update for 4th Feb 2019

Near Term Trend: ↑ (UP)

Market update: Nifty had a roller coaster of a day ( as expected on a budget day). It opened positively above yesterdays high of 10830 and kept trading at 10860 levels for some time after opening and shot to 10984 levels around midday. Bears remember 10980 levels pretty well so they became active arond it and pushed Nifty back to 10820 levels. Bulls again came to rescue and pushed nifty back to 10900 levels. Overall it was a good day for bulls and markets finally closed 75 points up at 10893 levels.

Yesterday we had mentioned that rally we saw carries lots of significance and importance and if Nifty can sustain/trade above 10830 levels then it will probably mark the start of a new trend on the upside. Momentum and force we saw yesterday has the capability of pushing nifty to much higher levels.

Overall Market has been frustrating and 'tiring out' traders since last one month with no directional moves. We call it ' headless chicken' market.  Such markets are there to serve just one purpose i.e. throw traders out so that when the actual trending move take place every trader is tired already and afraid to take a trading position. Every now and then one can see such period , they are indeed frustrating but help markets clean up the froth and get rid of weak trading hands. I gave an example of  June'2018 when we saw similar actions ( interestingly levels were similar too).

I have been mentioning three possibilities since last couple of days a) either market has started a new leg down or b) its just an X wave ( post which market will again start moving up) c) or its an extension of 'G' leg which is developing as an 'irregular correction'. I mentioned yesterday that option  (c) is looking more probable. Option (a) is bearish whereas option (b) & (c) are bullish. Now after seeing todays we are reasonably sure that its option (c) or (b) and that's the reason we have changed the near term scenario to up. Please note probably this is the first time in last many weeks when we have changed the trend to 'up'. 

Markets will continue to be volatile and will not be easy to trade going forward. Having said this 'going long' is the only logical trade one should get in from now on. But do keep in mind the high volatility. Today markets fell from 10980 to 10820 so one needs to be tough mentally, be patient and keep a very calm head while trading in such markets at the same time one cannot keep holding the position indefinitely and risk running into huge losses. So every trade has to be properly managed. 

We keep guiding and advising our subscribers through regular intraday whatsapp updates as to what needs to be done during trading hours.If you wish to subscribe to our live whatsapp Nifty calls/trading recommendation then you may subscribe using below link:

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Have a Nice weekend!

Nifty View: Update for 1st Feb 2019

 Near Term Trend: ↔ (sideways)

Market update: Nifty had a blast today. It opened with a gap up at 10700 levels and never looked back. Kept rising through entire session and closed at highest point of the day at 10830 up 180 points.

We had mentioned in our previous post that since last 3 months Nifty is playing a familiar script where it falls for 4-6 days and then rises for 4-6 days. So overall there is absolutely no movement and market is just dancing around at same levels in a tight range. After falling for 6 days (and touching 10580 levels) market has now started moving up. It will be interesting to see if bulls can maintain and carry the moment for more than 4-5 days. For nifty to break this tight range of 10500-10900 this 4-6 days of alternate bull/bear moves needs to break as well.

Coming back to todays movement, it was pretty strong and carry a lot of weightage specially since it has come just one day ahead of budget. We had also mentioned yesterday that presently there are 3 scenario developing and its possible that a) either market has started a new leg down or b) its just an X wave ( post which market will again start moving up) c) or its an extension of 'G' leg which is developing as an 'irregular correction'. We had also mentioned that the probability of market starting a new leg on the downside seemed more however todays market post the biggest rally of last 2 months and the sheer momentum and force with which market rallied are suggesting that markets are not yet done the idea of  testing higher levels and the last probability (continuation of G leg has become equally probable too).

Single day rally in a bear trend or a single day fall in a bull run usually doesn't mean much and one should not attach too much importance to it but if there is a follow up trading above 10830 levels tomorrows and market sustain those levels then the probability of market continuing this rally and testing higher levels will increase manifolds.

Overall from a positional trading point of view the January month has been pretty frustrating for traders. It started at 10800 levels and ended at 10800 levels too. It just didn't give any trending move/breakout whatsoever. However such period are often expected, I remember Jun'2018 was also one such month last year where Nifty just kept on moving directionless for a month and interestingly levels were similar too (10600-10900). So after a strong trend or after every 7-8 months, its normal to see such a directionless period that's how market tires out traders or frustrate them. One thing that can be said with 100% surety is that such markets do not last forever and sooner or later the real trend begins. More the consolidation bigger the trend that follows. To continue with my June'2018 example last year when the consolidation was over Nifty gave a movement of 1000+ points which was pretty much in one straight line. There were many traders who had given up after getting stopped out for 1-2 times but those who stayed reaped the reward later.
 
Like They say in cricket, "when a good ball beats you,you should just forget about it and focus on next ball" same applies for trading too. One should forget about  yesterday and focus on tomorrow.

Trading recommendations: like I mentioned yesterday if someone is short he can keep a SL of 10830-10840 ( so if one see a follow up buying tomorrow above todays high then he should exit) and if someone wants to go long he can go long above 10840-850 levels (provided those levels are sustained by market). Keep in mind due to budget the SL has to be big (10694)


We keep guiding and advising our subscribers through regular whatsapp updates as to what needs to be done during trading hours.If you wish to subscribe to our live whatsapp Nifty calls/trading recommendation then you may subscribe using below link:

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Nifty View: Update for 31st Jan 2019

Near Term Trend: ↔ (sideways with a downward bias)

Market update: Nifty opened 50 points up at 10700 levels but couldn't keep up the momentum and drifted down to 10620 levels. Some support at the lower levels saw Nifty closing at par at 10752.

Overall it was not a good day for bulls, even though there was no breakdown as such , bulls failed to add any gain above the yesterdays high which suggests the confidence to buy at higher level is lacking and for now Bulls just want to buy at dips.

As we mentioned yesterday, looking at recent history there is a trend of 4-6 days of bearish moves followed by 4-6 days of bullish moves. Market has been playing same script for last 2-3 months and same holds true even for now. There is a small possibility that market will remain range bound or +ve for next 2-3 days however if it fails to add any sizeable gain during this time then bears might get active again.

Overall it seems the risk on the downside are increasing a bit and there is a possibility that short term top is already done at 10987 levels and markets have already started a new leg down. However for now it just remains a possibility and if its true then we might see a dip from here to the lows of 10300 (or even lower) levels once again. Volatility is likely to be picked up because of budget and expiry tomorrow so be prepared for some wild swings

Technically speaking, It seems the G leg is over ( at failure point of 10930) and we have started a new leg on the downside, however there is still a possibility that either G leg is subdividing  or its just an X wave which means another corrective/sideways action will open soon. So any trading strategy needs to be designed keeping these thing in mind. Scenario is likely to become clear as the trading progress from hereon. If its an X wave then we should not break below 10340 levels ( election day result) and if its part of G leg then we can see a bounce from any where from 10500-10600 levels.

Trading recommendations: Markets are posing difficult questions right now (they always do that don't they). So one must be extremely careful in deciding the trading strategy. Whichever way one trades, the stop loss will be big. For now one should refrain from buying at current levels and wait for Nifty to cross 10800-820 levels first. If you want to short then one may use pull back for shorts ( by keeping a SL of 10840 levels) but keep in mind due to expiry and budget 100-150 point movement can come anytime triggering your stop loss. Less risky traders are advised to observe and wait till budget is out of the way.

We keep guiding and advising our subscribers through regular whatsapp updates as to what needs to be done during trading hours.If you wish to subscribe to our live whatsapp Nifty calls/trading recommendation then you may subscribe using below link:

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Nifty View: Update for 30th Jan 2019

Near Term Trend: ↔ (sideways with a downward bias)

Market update: Nifty opened at par after two days of heavy selling but drifted below 10600 and touched 10583 before some late buying coupled with short covering lifted the index and it closed just 10 points down at 10652 levels.

We had mentioned in yesterdays post that Nifty is appearing slightly oversold on the short term charts so a pullback/consolidation at these level is expected. Also it was the 6th day of consecutive fall in Nifty today and as the case has been since last 3 months, Nifty has max fallen ( made lower lows) for 6 days in row. A similar script played out today as well and after falling 70-80 points Nifty saw some pull back. Market has been directionless since last 2-3 months and there is a counter moves of bulls and bears taking place which last for 4-6 days in each direction. Now it will be interesting to see if Nifty can sustain the upmove/pull back it witnessed today and bulls take over for next 4-5 days. In other words we need to observe if market is playing the same script or it changes it.

Even though Nifty made a new low today and was trading weak throughout the day, the last hour pullback does give some hope to bulls and there still remains a possibility of Nifty moving up from these levels however it has considerably weakened now. Yesterday Nifty broke 10694 which was the previous swing low and today it broke below 10630 which was an earlier swing low. So Nifty has been making lower lows. Now the next swing low is sitting at 10530 levels and below that we have 10340 levels ( low made on election day result) which should be the final support for bulls. We had mentioned yesterday that another weak day will probably confirm that near term trend has now changed in favor of bears however even though we saw some weakness, it wasn't conclusive enough so we need more evidence to confirm that the trend has actually changed to down now ( for now it remains a strong probability).

Coming few days could be critical for Nifty, considering that budget is just round the corner there could be some spike in volatility ( as usually happens during budget). So traders are advised to keep positions light till then. continuous weakness from here below 10540 levels would suggest that trend has probably changed for time being. On the upside, 10750-10800 levels is likely to give stiff resistance. PCR (0.83)is totally in favor of bears at the moment so pressure is likely to continue till expiry atleast. Bulls can take heart from the fact that  Bank Nifty (even though is looking pretty weak) is giving a positive divergence ( for now). Also the market breadth was positive today and advance decline ratio was a healthy   31:19.

Trading recommendations: Same as yesterday,  There is a possibility that markets have started a new down leg at the same time since market is already fallen for 6 days & the pull back we saw today can be extended for another 2-3 days. Also the volatility is likely to pick up in short term because of budget. So if one must trade, trade light and trade with strict SL.

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Nifty View: Update for 29th Jan 2019

Near Term Trend: ↔ (sideways with a downward bias)

Market update: It was another bad for Nifty. It managed to open in a slightly positive territory but soon selling emerged and it kept getting intensified as the trading progressed and the pressure was visible till the very end. There was just one final small push from the previous low of 10630 which supported Nifty during the closing hours. Still markets closed with  a substantial 120 point loss at 10661 levels.

Overall it was another day where Nifty fell with momentum, actually the momentum was even stronger today than it was there on Friday. Nifty had a crucial support at 10692 which was breached with ease in the morning session itself. Bulls needed to defend it to rekindle any hope of an immediate revival but they failed miserably.

We had been saying that there was still a chance of markets pushing for one more leg up, however with todays fall the chances of a pull back have really reduced. Today the charts are telling a different story. Nifty had taken 5 days to rise from 10692 to 10987 and now it has retraced entire move in almost same time which is a classic sign of a trend reversal. However there are plenty of support available to Nifty between 10500-10650, also on the short term chart the markets is slightly in oversold territory so there can be a short term consolidation/pull back from current levels or 100-150 points down from here so if you are short/planning to short then please keep that in mind. On the other hand if we have one more bad day for Nifty then it will seal the fate conclusively in favour of bears probably.

Sine Oct'18 Nifty has max fallen 6 days in a row (during election result where it opened gap down and recovered fully by the time trading progressed). Now today was the 5th day of fall (lower low) in Nifty. So another fall tomorrow will make the current fall as the biggest fall of last 3 months ( time wise) and this is something which should not be taken lightly. Another thing which goes in favour of bears is that last 2 days fall has been in a straight line and seems impulsive ( there are no overlapping waves to be seen).

Technically speaking, we have been mentioning that Nifty making 7 leg diametric which is in its last leg (G). and we were expecting G to touch 11k+ levels. However now that we have a breach of 10700 levels ( which was the starting point of G) there is a high probability that G is over (as a failure) and a new trend down has started downwards. Nifty might still recover from here ( If G leg is moving as per irregular correction or if the fall from 10987 is just an 'X' wave). Traders should keep this in mind while planning their trading strategies.

Trading recommendations: Even though we were moderately bullish on markets we had exited our longs on Friday itself @ 10835 levels as the up move was not progressing as per the expected lines. Now going forward the trading strategy has to be prepared keeping these factors in minds i.e. a) Slightly oversold markets on short term charts b) Possibility of G leg getting finished and opening of a new leg down & c) Fall from 10987 as a connecting 'X' wave (which means another corrective will open soon). Don't recommend buying for now selling on rise with proper SL could be adopted ( with budget just round the corner volatility will be very high so trade light).

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Thanks for reading and happy trading!
 

Nifty View: Update for 28th Jan 2019

Near Term Trend: ↔ (sideways)

Market update: Nifty opened  on a positive note today above 10900 however fell flat again and saw an increase in selling pressure towards the end. It gave up 160 point from day high and finally closed 70 point down at 10780 levels.

Today bears ruled and they totally controlled markets no doubt about that. There were many indicators which were pointing to one more leg up in next few days to 11K+ levels. We were moderately bullish on the markets in near term and have been saying this for last few days. However  markets have shown they are not in the mood to go up immediately. So we were wrong in short term this time no two way about it and humbly accept the same but does that mean near term trend has turned bearish? Answer is no not yet (not in our opinion). let me try and explain.

Today when markets fell it fell with momentum and impulse (Something which was missing since last few days) but its a classic case of  "too little too late". In the very short term yes it might have some impact but overall in medium term perspective it doesn't change anything. Today is already the fourth day of the fall from 10985 levels. It had taken Nifty 5 days to reach 10987 from 10700 and now it has already consumed 4 days but 10700 is still intact. Fall we are seeing since last few weeks is having too many overlapping waves so for immediate short term may be yes we have momentum on the downside and the risk have increased a bit but overall it remains a corrective and sideways move which can stretch for few more days but not many.

We were of the opinion that time for choppiness and consolidation is over and Nifty should start breaking free but it seems some more time is pending for that. Since we saw some impulse in todays fall, its possible that market fall some more from these levels (even retest levels of 10600-10650 or even lower) but that would still be part of ongoing consolidation only which means a move up is still pending only thing which has changed is that it may not start from 10800-10900 levels as we were thinking initially but there is a possibility that markets go down a little more from here and then start moving up (from 10600-10700 or lower levels). We need to observe markets carefully over next few days to see how its behaving and accordingly plan our next move.

Another important thing to note is that ever since market hit 10K levels in Oct'18 it has always fallen 4 days  max in a row ( made 4 consecutive lower lows). Only exception is the election day result  time when Nifty fell for 6 days and hit 10340 levels. Now since 4 days have already gone we can expect 1-2 days for fall more before Bulls attempt to make another comeback. How successful they will be  that remains to be seen.

Trading recommendations: Considering the choppiness we are witnessing its prudent to sit on cash wait for markets to give a clear breakout first.  I don't recommend going short but waiting for right moment to go long.

Have a nice weekend!

 

Technical learnings: Types of correction (Irregular and flat)

Correction Patterns:

So what are corrections or corrective moves? Basically in simple words the correction is a movement in stock price which joins two impulses or trending moves. As the name suggests a correction is just  a temporary phenomenon and when they are over a trending move begins.

A corrective move is found between two impulses i.e. when a trend ends corrective move begins and similarly when a corrective move ends a new trend begins. Every impulse has five legs i.e. 12345 & leg 2 & 4 in each impulse are corrective moves or correction patterns. They are usually smaller price wise but bigger time wise than trending moves (1,3&5). They often presents a directionless trade and spend too much time doing nothing. Which makes them harder to trade.

Once markets have taken a big trending move it needs time to digest those move, corrective pattern help market digest previous move.

Below are the main Corrective moves or Correction pattern which can be found. 


Corrective Patterns



1. A-B-C simple zigzag : Simple zigzag is most simple and common pattern found . They usually found in wave 2 of an impulse. in such corrections wave A & C tends to be equal though sometimes wave C can stretch to 161.8% of wave A

2. A-B-C Flat corrective: Its similar to zigzag only thing is all the legs in such patterns tends to be equal. So entire correction is like a channeled move.

3. A-B-C Irregular correction: Irregular corrections are most confusing of the lot and are very common too ( they are also called expanded flat). In such corrections wave B will always cross start point of wave A, giving an impression that correction is over however just when everyone goes long prices turn down and C leg turns lower than end point of wave A which gives the impression as if a new trending move has started on the downside. However as soon as the wave C ends, the prices turns in opposite direction and the reversal is usually very fast and sharp, catching everyone with surprise. Irregular corrections when identified can be an excellent trading opportunities however its almost impossible to identify them in advance. But they can be identified when they are nearing completion or already completed.