Nifty Outlook and Trend for 30th Apr 2019

Medium Term Trend: ↑(UP)

 

Market update: After witnessing a sharp fall on expiry day, Nifty once again rallied 100+ points and closed above 11750 levels.

 

Nifty now has filled the 'down gap' it had created previously ( 11720-11750) thus it seems its ready to touch higher levels now. However it has very strong resistance at 11810 & 11850 levels hence these are the 2 critical levels to watch out for in coming days. Crossing these levels should pave the way for higher levels in Nifty.

 

One thing worth mentioning is that entire rise started from 10800 levels ( though the low point is 10600 the wave started from 10800). since 10800 we have seen 3 rallies ( 4th one is in progress now)

 

1st: 10800 to 11550  = 750 points

2nd:11310 to 11760 =  450 points

3rd:11550 to 11860 =  310 points

4th: 11560 to 11795 = 235 points (in progress and 11795 was hit on Thursday i.e, on expiry) 

 

Now if you look at it time wise, then 1st rally took 13/14 days, 2nd took 7 days,3rd took 4 days and the 4th (current one) has completed 3 days.

 

So it can be observed that magnitude of rallies is getting shorter and shorter both pricewise and timewise ( traders appear in hurry to book profits) at the same time the lower levels around 11550-11625 continue to see buying. Each subsequent rally is around 65-80% of previous rally. Such a scenario might be indicating that probably markets are losing strength slowly.

 Hence one should continue to be cautious and keep a close eye on 11800-1870 levels to see if the current rally remains shorter than previous one or become bigger and start a new trend. Move above 11870 ( which is also the previous high) will negate the current structure and will probably give a new thrust to the upmove we are witnessing currently. This is a short week ( just 3 days) so that's another reason to stay cautious.

 

Happy Trading!

 

 

 

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Nifty Outlook and Trend for 26th Apr 2019

Medium Term Trend: ↑(UP)-

 

Market update: Nifty had a volatile day today , it opened flat went on to hit 11800 and then crashed to 11630 levels ( almost 170 points down from days high), It closed at 11641 down 80 points.

 

Yesterday we had mentioned that even though Nifty has closed above 11700-720 levels, the move has come only at the fag end of the session and the 'island reversal' area is also not filled so we need to see sustained trading above 11740-11750 levels to conclude if Nifty is ready for another move on the upside.

 

Though Nifty opened and traded strong initially it failed to sustain above 11750 and dropped back at 11720 levels and then in the last 30 mins it just let go. We needed a close above 11750 levels and now that we don't have it , theres a chance that entire pull back of yesterday was a mere pull back and Nifty probably will go down again.

 

If we see further weakness below 11620-610 levels tomorrow then Nifty is going to test 11550 levels once again and this time there is a very high probability that it will be broken but keep in mind the trend of market will remain up till the time 11450-470 level is not taken out so in a way the importance of 11550 is reduced now to some extent.

 

Last 3 days the call and pull writers have suffered a great deal. 9/10 times option writers have upper hand and they seldom lose because of time decay but this month was an exception & option writers were seen running for covers in all directions.

 

In nutshell, even tough market is trading in bullish zone , don't be tempted to buy yet. wait for market to give a clear signal and then only buy. Weakness below 11560 levels can take market down to 11450-75 levels and only when this level breaks can we expect more weakness to follow. VIX is sitting at 23+ levels and the choppy and volatile moves we are seeing since last few days can be expected in future as well.

 

Happy Trading!

 

 

 

 

Nifty Outlook and Trend for 25th Apr 2019

Medium Term Trend: ↑(UP)

Market update: Nifty had a cracker of a rally today. It opened slightly positive at 11615 levels and kept hovering around 11600 levels for most part of the day before shooting up to 11730 levels in last hour or so. It closed up 150 points at 11725 levels.

Day before yesterday Nifty 11700 CE strike price had seen an addition of around 30 lakh shares, today entire 30 lac+ got unwound. So this does make things pretty interesting, addition of  such a huge open interest and unwind of same within next 2 days is very very rare. Also we needed Nifty to break below 11550-520 levels by Thursday ( tomorrow) to signify the start of  trend reversal however Nifty took support at 11560 levels and once again bounced from there.

So after seeing todays rally its safe to assume that upside trend has resumed again? Well even though Nifty has closed above 11720 levels ( which we had mentioned as the key resistance level in previous post), the move has come only in the fag end of the session and is seem driven by short covering rather than actual buying hence need to see some more strength over todays high (11750 levels) to confirm the same. Had Nifty broken above 11700-720 in the morning session and then sustained above it for remainder of the day then probably we could have concluded that fear of correction is over but the manner in which 11720 is broken, we need to see some more strength or rather sustained trading above 11740-11750 levels.

On the other hand if Nifty again slips below 11700 and then below 11650 levels then probably this was just a false break. On Monday when Nifty had fallen 150 points ( 11750 to 11600), it had made a gap down opening and the gap stands at 11725-11750 levels. Today inspite of such a ferocious upmove, Nifty failed to close above the gapdown area. So its important that Nifty close the gap ( which is also the island reversal area), to negate the bearish implications of same. For now the gap still stands.

Also, looking at entire move from 10600 levels, You can make a strong trend line joining recent bottoms @ 10583 , 10730, 10850 & 11550 levels. This trend line was broken on Monday, now today even though Nifty bounced sharply it failed to close above the trendline. The upper level /resistance of this trend line comes to around 11740-750 levels ( exactly the high touched by Nifty today).

In Summary, even though Nifty has broken 11720 ( which shows Bulls are still in play and not in mood of giving up easily), we need to see sustained buying ( and not just a spike) above 11720-11750 levels now ( todays high) to conclude that fear of correction is probably over and Nifty is ready to move higher but if Nifty slips from these levels then probably the correction or sideways movement will resume.

Happy Trading!