Nifty Outlook and Trend for 22nd Apr 2019

Medium Term Trend: ↑(Up)

Market update: Nifty opened strong at 11850 however dropped immediately at 11800 levels and closed at 11750 levels ( down 40 points).

 

Today Index made a " Bearish belt hold pattern". A bearish belt hold pattern is one where opening price becomes the highest point of the day and the closing price is near about the lowest point of the day. It signifies weakness and indicates that probably bears are getting active again. It can have negative/bearish implications in case market start trading below its lowest point ( 11735).

 

Having said this, for now there is no change in the overall trend of the market and it remains on the upside & will remain up till the time 11520-11550 levels is not taken out by Bears that too in next 3 days ( before expiry).

 

We continue to believe that markets are overstretched and a correction can come anytime and it can be sharp and sudden however as long as the trend is up there is a chance that markets can still go higher and touch 11900 and even 12K levels.

 

Today the weekly closing has come below 11760 which was the previous all time high for Nifty and it should come as a disappointment for bulls who were hoping for a fresh rally once 11760 was taken out. Many traders have gone long above 11760 in last 1-2 trading session thinking all the resistances have now been taken out and Nifty should see higher levels from here. Well it can still see higher levels, we don't deny it but considering the massive rally of 1200 points which we have seen in last 45 days, one should be cautious and careful. If nifty crosses 11855 level ( todays high) then we can expect this rally to continue for now.

 

One should keep in mind that we have seen pretty much one sided move in last 40 days or so ( from lows of 10600) and the entire move is due to be corrected ( even if its bullish). VIX is moving up daily and has crossed 22 levels today, which again indicating that big players are bracing up for volatile moves in the coming days hence another reason to be cautious at current levels.

 

In Nutshell, be cautious at current level, weakness below todays lows and then below 11670-80 levels will invite further weakness in near term and if 11540 is broken in next 3 days then there is real danger of entire upmove getting over for time being. On the other hand, to continue with the bullish option, Nifty should conquer 11850 levels soon (which has become a formidable resistance now).

 

Happy Trading!!

 

Nifty Outlook and Trend for 18th Apr 2019

Medium Term Trend: ↑(Up)

Market update: Nifty had a very strong day today. It opened @ 11750 and went on to touch 11810 levels before closing at 11790 up 100+ points.

 

Nifty today registered a new high above 11760 levels and even crossed 11800 levels. This shouldn't come as a surprise to regular reader of this blog. We have been saying since last 2-3 days ( ever since Nifty failed to break below 11550 levels) that "even though Nifty upmove is appearing stretched there is a likelihood of Nifty attempting another shot at lifetime high and probably even crossing it". Today we got to see exactly that.

 

The entire fall from 11750 was looking like a corrective move and yesterday the downward trendline ( which was keeping the prices down) was broken on the upside on daily charts. We had changed the market trend to 'Up' last week on Thursday when it became clear that 11550 is not going to be broken even after 6-7 days of trying. Also, since last 2 days Nifty has been posting higher high and higher lows on daily chart ( which is a sign of strength). Today again we have another higher high and higher low.

 

So now that we have a new high in place, does it mean markets can continue to move up from here? Well the upmove can stretch a little bit more from here but keep in mind this entire move is still stretched (appears overbought and some amount of negative divergences has also surfaced today) and there is a possibility of a strong correction from here but as long the price chart does not show weakness it will be premature to assume that upside is done.

 

We had also been mentioning that entire move from lows of 10K levels shouldn't cross more than 300% time of previous move but now we have spent more than 300% time already and that means the entire rise from10K is not a corrective move of  previous fall (11750-10K) but a new leg of the existing pattern. This does change a lot of wave counts for long term (but nothing that should impact immediate or near term movement of Nifty). Will try to post new wave counts soon. 

Coming back to the near term movement, the Prices can reverse from these levels or continue to climb higher so the best strategy in such scenario is to keep holding longs with a strict stop loss. Once the correction or a trend reversal begins, the move could be pretty sharp trapping traders on wrong side hence trading on long side with a strict stop loss is recommended.

Current week is just a 3 day week and next one is expiry week, so expect lots of choppy moves going forward. Keep an eye on VIX, it has already crossed 21 which is sign and indication that high volatility days could be coming our way soon.

Happy Trading!

Nifty Outlook and Trend for 16th Apr 2019

Medium Term Trend: ↑(Up)

Market update: Nifty  opened slightly in +ve territory and traded in a narrow band between 11650-700 before closing at 11690 levels, up 50 points.

 

We had mentioned on Friday that since Nifty failed to break below 11550 decisively, chances are it may make another move on the upside and it will be confirmed on break above 11700-11720 levels. Even though Nifty failed to cross above 11700 levels it gave a another positive close and another higher top higher low candle was posted on daily charts which is definitely a sign of strength for now.

 

Nifty has been moving in a downward sloping channel for last 7-8 days and the upper trendline/resistance line (which was keeping Nifty down) was broken on hourly charts on Friday. Today the same was broken on the daily chart as well. So just to reiterate, unless Nifty is making some kind of failure or truncated pattern , chances are it may make another dash towards new time high and may be cross it as well (how far it will go or whether it will sustain there or not is something we need to analyse later).

 

Overall for now, our view remains same. Nifty's current move is overstretched which may reverse suddenly and without warning but as long as the trend remains up and Nifty is trading in the bullish zone , there are chances that this move will continue for now on the upside.

 

Happy Trading!