Nifty Outlook and Trend for 7th Mar 2019

Near Term Trend: ↓ Down

Market update: Nifty Opened with a slight gap and maintained the gap through out the day and closed strongly at 11050 levels up 60 points.

Nifty has given a good follow up above yesterdays huge rally however today the highest point was hit in first 30 mins of trading and entire day market traded below that only ( it was breached momentarily only in last few minutes) in the process Nifty made a doji like candle. The entire rise from 10585 levels is lacking impulse and thus remains a pullback or corrective move. All corrective moves ends sooner or later and the move which follows after that is usually a trending move.

Like we mentioned yesterday, today was the 10th day of this pullback and we are still sitting below previous high (11118) which is not giving enough confidence about the sustainability of this upmove. Now this may still stretch a bit more from here but its not going to be easy.

Pull back from 10585 lows is clearly looking like an A-B-C corrective move which is in its last leg ( C). Today C has almost achieved equality with A leg price wise as well as time wise.C leg can stretch a bit more and become bigger than A leg  but considering the fact that it remains a part of  bigger triangle/corrective it should not stretch much beyond here.

We have been saying that overall corrective and range bound markets we have been seeing is about to end and markets are likely to move in a strong trend soon. Now this is evident from the fact that open interest position in Nifty future is at record low. Total OI is sitting at less than 1.5crore ( usual average is 2.5-3 crore so its almost 50% of that). Now this clearly explains that most traders are out of market. Last 2-3 months have been a difficult month for traders and it seems most are tired of waiting for a breakout or getting stopped out in wild swings. With such low OI positions, markets are trading very light and Nifty can move strongly (in either direction).


Happy Trading!!

Nifty Outlook and Trend for 6th Mar 2019

Near Term Trend: ↓ Down

Market update: Nifty again opened weak around 10820 levels but immediately reversed and kept moving in one strong trend for entire day and closed at 10987 levels up 130 points.

Today was a very strong day and easily the best day since Nifty hit 10585 levels. However the only thing is that it has come too late. Today was the 9th day of rise from the low of 10585 and Nifty has managed to retrace only 75% in more than 100% of time ( Sensex is lagging behind even more and is currently sitting at 61.8% retracement level). The fall we had seen from 11118 levels was a slow one and failed to retrace previous rise by 100% in faster time. Now the rally or pullback we are seeing is doing the same thing and infact is even slower. So inspite of a strong upmove today, market is not giving a confidence ( not yet) that it has put the worst behind it.

However it doesn't mean that we can not see further rise from here, todays upmove was pretty strong and carried a lot of momentum so its possible that momentum is spilled over to next few days. Good thing about markets is the strong volume and the broad contribution. In last few days small cap and midcaps have started contributing to Nifty (it may be noted that all these stocks were continuously being hammered since last few months). Most indicators have turned into buy zone and PCR too remains in favour of bulls.

One interesting thing to note is that previous rally from 10583 to 11118 had taken 7 days, the fall witnessed from 11118 to 10585 took 8 days and now this pull back from 10585 levels has taken 9 days. So each move is getting bigger time wise yet remains smaller price wise which is giving contradicting signals.In Nov 2018, Nifty was at 10900 levels now after 4 months its still sitting at same level. This 'nothing' markets cannot continue for long should end sooner or later.

In nutshell, inspite of a strong thrust today, Nifty remains weak for now however strength above todays high followed by a close above 11020 levels tomorrow would most probably mean that markets may test higher level/new high once again.

Happy Trading!!

Nifty Outlook and Trend for 5th Mar 2019

Near Term Trend: ↓ Down

Market update: Nifty again opened strong around 10850 levels and traded in a very narrow range between 10820-10870 and finally closed at 10863, up 70 points.

Today was the 8th day for Nifty ( from the lows of 10585) and it has managed to close at 10860 levels which is around 50% retracement level. 50% fall retraced in 100% of time which is very very slow. Do keep in mind that previous fall from 11118 to 10585 was slow too, so a slower fall is being retraced by an even slower up move. Therefore, inspite of a positive and strong close the trend remains down for now.

Market continues to be sluggish and need a very strong thrust on the upside to break the current trend else there are chances of market going down and testing 10700-10600 levels once again. Like we mentioned previously, the current movement is looking like a triangle ( evidence is coming from the fact that upside legs and downside legs are carrying same characteristics so most probably these are part of same pattern and not different ones).

Next couple of days could be crucial for market as todays up move was built on +ve sentiments like easing of geopolitical uncertainties and strong global clues also during market hours Dow future was trading up+150 points. Now markets needs a strong follow up above todays high & then 10900-11K levels in next 2-3 days to show that its ready to move up. Overall the breadth of market remain positive (advance: decline was at 40:10) and has been positive for last few days ( ever since we touched 10585).

Technically too there is no change in view/wave count and we still maintain the same view and still believe that range bound markets we are witnessing are about to come to end pretty soon & trending move is likely to resume soon and once it starts and you don't act fast then you are likely to miss it. So be watchful and keep your eyes open.

Happy Trading!!

Nifty View: Outlook and Trend for 1st Mar 2019

Near Term Trend: ↓ Down 

Market update: Nifty Opened strong around 10850 levels but couldn't break free inspite of trying whole day and finally closed at 10790 levels, down 15 points.

A relatively calm expiry day was witnessed today ( especially considering the volatility we have been accustomed to seeing since last few days). Markets are looking a bit tired and 10850-10900 levels continue to pose a considerate amount of resistance to Nifty. It had taken 8 Days for Nifty to fall from 11118 levels to 10585 levels and now after 7 days we are still sitting at 10800 levels which is not even 50% retracement level. So unless Nifty makes a sharp comeback in next 2 days, there is a likelihood of Nifty testing 10600-650 levels again and try building a fresh up leg from there.

We have been saying that Nifty fall from 11118 levels to 10585 levels was slow and it didn't even have any momentum so theres a likelihood of a strong bounce ( sustainability and reach of the bounce was put under question). Now the rise are seeing from 10600 levels, seems to be even slower and erratic ( directionless) hence there is always a risk of market dropping (a bit)again  from here and probably try to start an up leg from there.

If you refer to  our wave counts ( posted couple of days back), we had mentioned that a triangle seems to be in progress, which was based on the fact that previous fall (marked as B leg) and the current upmove ( marked as C leg) are carrying same characteristics. Now it seems (probably) that C leg has matured and we are into D leg. It remains to be seen for how much time and how far D leg can continue. As per our past experience we have seen that D & E leg can sometimes finish very quickly (even intraday).

In nutshell, it seems markets are tired of moving in this small range of 10500-11000 and breakout seems imminent now. So traders who have been buying nifty at every 200 point dip and selling at every 200 point rise need to be a bit careful. There is no harm in doing such trades however now one needs to be extremely careful. If a trend breaks out on either side one is likely to be trapped. We would like to observe markets carefully for next 2-3 days and if its indeed moving like a triangle like we have been anticipating then there is a possibility of seeing lower levels from here.

Happy Trading!

Nifty View: Update for 28th Feb 2019

Near Term Trend: ↓ Down 

Market update: Nifty Opened strong and traded strong above 10900 however slipped suddenly and fell more than 150 points from days high and dropped to10760 levels. It finally closed with a small loss of around 30 points at 10800 levels.

Todays Opening was crucial, the way nifty opened and traded strong gave a signal that probably yesterdays sharp fall was just a bear trap & now Nifty once again ready to move up. Initial 1st hour of trade was pretty strong and usually (9/10 times) such trades results in very strong moves by market however today was an exception and the initial up move turned out to be a bull trap actually.

Once Nifty broke below 10840-10850 levels it became clear ( almost) that markets are not ready to move up and probably has opened a new leg on the downside. When we say downside we mean there is a real risk of testing 10600-10640 levels once again in near term and if 10600 gets broken this time then we are looking at much lower levels (10200-10300 or even lower).

Technically speaking, it seems C leg was done on the upside and D leg has started on the downside. Now it remains when and where this D leg ends and final E leg begins. (for wave counts ref my previous posts).

In terms of trading dynamics Diametric patterns are most difficult to trade and after diametric comes triangles. What we are seeing in this move after 10K levels ( from Oct lows) is a combination of Diametric and Triangle. Both these patterns combining together are giving an extremely tough time to traders. Reason they are tough to trade is because they are erratic and as per neo wave  they are virtually exception to every rule in the books.

Having said this, there is no reason to despise or hate triangles/Diametrics in spite of the fact that they are tough to trade and can cause a string of bad trades for one simple reason- The trend which follows once these patterns are complete is directional & pretty straight forward and if one has patience to remain invested he can easily reap the rewards later.
 

Nifty View: Update for 27th Feb 2019

Near Term Trend: ↓ Down 

Market update: Nifty Opened with a gap down of 50 odd points which stretched to 150 points due to geopolitical tensions but an immediate buying spree erased all the losses & even pushed Nifty in green momentarily. Nifty finally closed a loss of 45 points at 10835.

We had mentioned yesterday that even though Nifty has put on 4 days of gain & has crossed 10850 levels, the entire rise or up move is appearing slow and we need to wait for one more day to see if markets can add any gain over and above yesterdays close. Today market just crumpled in initial hours which of course is being attributed to geopolitical tensions however technicals were already pointing to another leg down ( ref to the wave counts posted in yesterdays post).

So what next? The fact that Nifty erased most of the losses today and closed just 40 odd points down will be seen as positive by many. However we are seeing it as failure by markets to close above previous day high and add any significant gains. In other words market remains in 'down trend' and need another strong push. Merely recovering from day low is not good enough, markets need to add point above previous day close.

Both Sensex & Nifty made a Doji candle today, Doji signifies indecisiveness. When markets crashed 150 points bulls knew they needed to support and pushed markets back up but once it reached yesterdays close point and started trading flat, they were clueless and lacked the strength to carry it forward. If it was a strong market then it should have  made a strong close today above 10900 levels.

Technically speaking, wave count remains same as posted yesterday and it remains to be seen if C leg has ended or still ongoing.

 In summary, todays recovery action by bulls is marked as an indecisive act by bulls where they managed to pull back from day lows but lacked the strength to take it forward (It can still be done tomorrow).Bulls needs to reassert themselves very strongly from here, they might have succeeded in pulling markets from disaster zone but that is not enough. They need to deliver more and deliver fast else wont be surprised to see bears taking control of the markets once again.


Jai Hind,Bravo to Indian armed forces & happy Trading to you!!



 

Nifty View: Update for 26th Feb 2019

Near Term Trend: ↓ Down 

Market update: Nifty opened almost flat (inspite of an overnight rally in US stocks and strong Asian markets) but recovered later and finally closed strong at 10880, up almost 90 points.

We had mentioned that 10800-10850 is a very key resistance zone for Nifty and if Nifty is able to cross it with momentum then probably we can see higher levels in Nifty. Nifty did cross it however the momentum was not very convincing (inspite of 90 points rally today). Ideally Nifty should have broken 10850 on Friday itself or in the first hour of trading today. So even though 10850 has been broken its not done convincingly ( as we would have liked to see) hence we are keeping the near term trend as down only, we need to see further strength in market tomorrow above these levels to change the trend to 'UP'.

At the time of writing this post, Dow future is up 160 points and SGX Nifty is trading strong, however its looking difficult that Nifty will be able to add any significant gain immediately from current levels simply because markets have turned overbought on short term charts so little bit of cooling off is expected.

The fall we saw from 11018 to 10585 though it was in one single line it was not very convincing now this rise which we are seeing from 10585 is carrying the same characteristics too and again is not very convincing ( specially the last 2 days). This could be on account of short covering, when Nifty had broken 10600 levels few days back many traders and brokerage houses had gone short but market reversed the very next day forcing traders to cover those short position. It will be interesting to see if market can see some followup buying once the short covering is out of way.

Having said this, the advance decline ratio continues to be positive running 4th day in a row which is a positive sign and PCR continue to be in favour of bulls.



Nifty

Technically speaking, Like we mentioned above that this rise is also carrying the same characteristics which we got to see in the previous fall. Such similarity is symptomatic and indicative of triangular movement. Tt seems since hitting the low of 10583 earlier this month ( which is marked as wave 'X') markets are making a triangle which is currently in 'C' leg & this pattern can continue till the pending 2 more legs D & E finishes too  (but keep in mind D& E leg can be pretty small and finish quickly).

B leg retraced almost 100% of the A leg and now C leg has retraced almost 50% of the B leg. We need to see if this C leg ends here and D legs open up again.

 Happy Trading!