Nifty View: Update for 6th Feb 2019

Near Term Trend: ↑ (UP)

Market update: Nifty opened slightly positive and quickly dropped below 10900 levels however it pulled itself from there and even touched 10960 levels but familiar resistance in 10950-10980 range didn't allow Nifty to move any further. It finally closed at 10930 levels up 20 points.

Overall it was a fairly stable kind of day and even though Nifty didn't give any breakout above the resistance zone, it didn't give any break down either though it threatened to fall in the morning session when it dropped below 10900 levels.

Movement today in Nifty remained more or less in line with the trend we had predicted though we would have liked to see a breakout above 10980 levels however we still have time for that (breakout today was good to have and not must to have).

Markets are slowly but surely inching up as there is lot of skepticism at 10900 levels and buyers are not willing to commit fully at current levels. However everything will change once we have a breakout above 10980 levels. Those who follow MACD they may note it has given a bullish crossover today and it has come after a series of false breakouts and whipsaws  so it will be intresting to see if it turns out to be a false breakout once again.

Its often observed that once a resistance or support becomes too obvious its usually taken out by a gap up or gap down opening. Now I am not saying that is what going to happen tomorrow, but it remains a possibility. On the downside if we start trading below 10890 levels consistently then probably we would need a rethink. Since budget is out of way, VIX has fallen drastically from 18-19 levels to around 15 now and lower VIX  along with positive advance decline ratio should encourage bulls further (Advance decline ratio was 30:19 today).

In nutshell, nothing much changed today. Nifty has been showing sign of strengths ever since it touched 10600 levels 5 days back and slowly but surely inching its way up. Having said this 10900-10980 range remains a critical level to watch and most traders are probably waiting for a breakout above this level. Nifty has been moving up since last 4-5 days and it remains to be seen if Nifty can stretch this up-trend beyond 6 days ( which has been the upper limit since last 2 months).
This rangebound market has more or less run its course and we don't expect it to stretch it much beyond current levels so a breakout (or breakdown) is expected soon now.


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Nifty View: Update for 5th Feb 2019

Near Term Trend: ↑ (UP)

Market update: Nifty opened weak around 40 point downs at 10850 levels and even touched day low of 10814 before bulls came to support it and pushed it all the way to 10930 (100+ points from day low). Nifty finally closed up 20 points at 10912 levels.

We had mentioned in our last post that Nifty is carrying a lot of momentum and force and there are chances that we might see higher levels from here. On Sensex we already have a 100% retracement of last 6 days fall in just 3 days (50% times). However on Nifty same is yet to be seen. Nifty took 6 days to fall from 10987 levels to 10583 levels and today was the 4th day and we are still below those highs (on budget day Nifty failed to cross the high point by 4-5 points).

Overall there is no change in our view and we still believe Nifty has the power to propel itself to higher levels and that's the reason we changed the near term trend to 'UP'. If we see a breakout above 10985 tomorrow then that will further strengthen our stand.

We had also mentioned that markets are right now giving 4-5 days of alternate bulls and bear moves i.e. it moves up for 4-6 days and then move down for 4-6 days, if market has to break this consolidation & this range bound trading then this alternate bout of buying and selling has to stop as well. Today was already 4th day of the up move so lets see if market follows the same script or offers something new this time around.

Technically speaking, we had said there is possibility that G leg is subdividing or the fall we saw from 10987 to 10583 was just an 'X' wave and same hold true even right now as well. Both these options are bullish options which allows higher levels in Nifty from here.

From trading perspective we had suggested buying above 10840 levels on Thursday (Nifty already saw an intraday rally of 150 points from those levels on Friday). I still suggest going long only with a proper SL of course (Inspite of knowing that whenever Nifty has gone above 10900 it has come crashing down only).

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Nifty Medium Term Outlook: Feb 2019

Nifty Outlook: I have never posted my medium/long term outlook on the blog and since many have been asking me for my medium/long term view, let me post it now. I am posting my view/wave counts from Jan 2017 ( low of 8K) as wave count prior to that assume very little significance as of now (from 6-12 months perspective).

Now most analyst and chartist are reading the recent development as a potential H&S pattern in the making. We are not saying that they are wrong but we don't fully concur. Main reason is the strong rise from all the way to 8k levels to 11k levels ( tail of left shoulder). As per our analysis and view its too long and strong. Secondly the congestion we are witnessing at 10900 levels ( supposedly right shoulder) is not very symptomatic of a H&S pattern or right shoulder. Now it may still be a right shoulder (in which case market should not cross 11177 levels and should turn sharply from these levels).



Nifty- H&S in making?

Now as per our view, we feel Nifty is either making a -

a) 7 legged diametric pattern ( ABCDEFG) : Count mentioned in Blue 
                                                 or
b) 5 legged Extracting triangle: Count mentioned in red



Nifty Diametric or Extracting Triangle

Now the only difference is if its a) 7 legged diametric pattern then its already completed at 11750 last year in Sep and if its b) Extracting triangle in progress then its still ongoing but must terminate below 11750 levels. So upside is capped in both the cases. Lets see how these pattern can impact markets. For short term both have same impact so it doesn't matter which one it is, the near term direction remains same.

7 legged diametric pattern ( ABCDEFG): If its a Diametric pattern then we already have a pattern completion at 11750 and the fall from 11750 to 10k levels In Sep-Oct last year was 'A' leg of next corrective and the rise we have seen from 10k levels is B leg which is still in making ( now this B leg in itelf is developing as another diametric pattern which I have been mentioning in my daily posts). The thing is the fall from 11750 to 10k in Sep oct last year though was sharp, it wasn't probably an impulsive move and was a corrective move only. If its true then B leg can test 78.8% of entire fall which means levels of 11400+ in Nifty. Now if  the A leg ( 11750-10K) was an impulsive move then market should not retrace more than 61.8% level of the entire fall which gives us levels of 11150. So if our diametric assumptions is true then we have 2 critical levels to watch out for 11150 and 11400 ( only chance that Nifty can go above 11750 is if this correction is developing as an 'irregular' or 'expanded flat' but looking at charts it doesn't look like so but still its a possibility even though a little one).Now Its possible that Nifty reverses from here itself ( 11150/11400 is the cap, its not the minimum requirement). If this is the scenario playing out then we might see sub 10K levels again soon but the fall wont be in one single line and it will not be easy to trade and once its complete expect a sharp move on the upside again which can go as high as 15K ( mimic the original 'A' leg of the diametric)

5 legged Extracting triangle: Now lets assume the pattern is developing as an extracting triangle. We can clearly see that falls are getting bigger and rallies are getting smaller which tells us the last point till which the current rally ( or E leg of extracting triangle) can go is 11700. If it happens then we will have a double top type scenario at 11700 levels and the next pattern will start only once E leg is complete. Problem is E leg has a big range and it can terminate anywhere from 11k to 11700 levels however it should terminate within next 4-8 weeks from now. Once Extracting triangle is completed the trend should start downward and though it wont be fast it wont be slow either (will be more impulsive than diametric) and even has the capacity to retrace 100% of its rise (which means testing sub 8k levels in Nifty).

So whichever way you look, currently there is a possibility for Nifty to move up a little bit from here and from there we should start a new leg down which could take us below 10k ( 9300-9900 if its a Diametric pattern) or all the way down to 8k levels ( if its a extracting triangle).However one should not focus on such long term targets as from trading perspective they don't matter. What matter is what Nifty is going to do in next 2-4 weeks but still its important that your long term direction is clear so that when actual move starts you are not taken by surprise.

Coming to fundamentals, I believe markets are super expensive presently and PE ratio is hovering around 26-27 ( it went as high as 28 which is similar to what we saw in Jan 2008). However a high PE ratio doesn't mean that markets will fall. If earning improves then PE will fall in line too but still its definitely not the right time to invest so will not suggest anyone to invest in stocks at current levels ( not even through SIP or mutual funds atleast till earning start improving and Nifty PE ratio fall below 20). That way your investment will be much safer from a medium term perspective. If one is a swing trader then all the times are right for trading and it doesn't matter in which direction Nifty moves, you can still make money. However for an investor the right timing matters a lot.

 

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)


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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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