Nifty Analysis: Outlook and Trend for 4th Jun 2020

Medium Term Trend: ↑UP (Changes to down below 9000)

Upward March continues: Niftys relentless rise continued and today it hit a high of around 10170 levels and closed at 10060 levels up 80 points.

Nifty opened around 10170 but faced some profit booking at higher levels which dragged it down slightly. Overall Nifty has been rising since last 8-10 days and from the lows of 8800,it has touched 10200 levels which translates to a rally of almost 1400 points in 10 days is ( 140 points each day). This is massive and huge and most importantly taken traders by surprise.

Now since markets have run up so sharply some slowing down or sideways movement is possible at these levels. Momentum indicators are slowing down which are also suggesting a possible pause. Mind you this doesn't mean one should go and short (that ship has sailed long back). Trying to short this market thinking that its top area can be extremely dangerous and must be avoided. Traders should look only to buy in this market.

Now looking into the charts we can definitely see some sort of tiredness creeping in so there is no harm in booking full/partial profits at this stage. looking at levels, if Nifty trades below 10050 tomorrow then it can fall to 9970-80 levels and if 9970 levels breaks, then we can see some more weakness/profit booking. Having said this the levels around 9700-9750 ( bullish island reversal area) supposed to provide a very strong support and its highly unlikely that markets will break these levels now ( less than 20% chance).

As far as trading is concerned, profit booking is advised at these level and if 9975 breaks tomorrow and sustains for 10-15 mins then one should book 100% profit and sit out for some time. We also booked 100% profit today and would prefer to sit out and observe markets for few days before taking next trading call.

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Nifty Analysis: Outlook and Trend for 2nd Jun 2020

Medium Term Trend: ↑UP (Changes to down below 9000)
9800 Conquered: As we have been suspecting since last few days, Nifty finally managed to close above the critical level of 9800 hence overall trend of the market is changed to 'UP' now with a reversal pegged at 9K levels.

Last time when Nifty had closed above 9800 levels (April Expiry day), it was not very convincing ( hence we kept the trend as down only) and markets reversed 500 points the very next day. However this time looks like its done for good. Last time the trend was moved to 'down' was way back in Feb when Nifty broke below 12K levels now after 3.5 months the trend is changed to 'up' again.

There are couple of interesting things which have happened in the markets today. Lets see the daily chart of Nifty to analyze what are those.

Nifty Hourly chart

1: The previous island reversal area ( 9750-9600) area is closed today. We had been saying all this while so that is not at all surprising however what is surprising is that the bearish "island reversal" area is taken by yet another gap-up turning a bearish 'island reversal' into a bullish 'island reversal' Now I am not sure when was the last time such a powerful bullish pattern ( this indeed could be very powerful) was seen in Indian markets.

2.If you see the entire fall from 9850 levels to 8823 levels had taken Nifty 11 days now the complete fall is retraced in just 9 days. This faster retracement is a classic sign that market is shifting gears and trend is changing and already changed now(though we had predicted he same when Nifty was just at 9k levels). Hence now there shouldn't be any doubt in any ones mind about the direction market is going towards.

Now going forward, we see strong support in 9600-9750 area for Nifty and any fall is likely to be arrested around these levels. Nifty now in all probabilities heading towards 10k+ levels ( mind you pull backs will continue to come from time to time and one need to be careful). 9950-10050 levels used to be the old support levels for Nifty hence some sort of resistance is expected around these levels. Overall mkts are still in slightly overbought zone for short term ( but that doesn't mean its a sell signal).

As far as trading is concerned, we had entered long @ 8950 levels which still continues as of date ( Nifty is up around 1000 points from our entry price)

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Nifty Analysis: Outlook and Trend for 01st Jun 2020

Medium Term Trend: ↓Down (Changes to up above 9800)

Maintaining strength: Nifty opened weak around 9400 levels but managed to move back above 9500 levels and almost hit 9600 levels and closed at 9580 up 90 points.

Nifty continues to move in line with our expectations and like we have been saying there is a good chance that Nifty is headed towards 9800 levels.  On the short term charts market continues to remain slightly overbought hence some sort of sideways movement/consolidation is possible before Nifty start moving again.

Today Nifty future discount widened to around 70-80 points. This is huge and indicative of lack of convictions traders have in markets. However we believe the discounting is more because positions are being 'hedged' by smart traders of course some sort of shorting is also going on so that is contributing as well.Anyways not too much should be read into it.

Today Nifty made a new high and that is important. It sustaining right in the middle of  'island reversal' area which is not a good news for bears, ideally they would have liked to see a strong reaction from 9500 levels (in the morning there was a sign of such reaction but then markets recovered quickly)

Now since market is broadly moving in line with our expectations there nothing much to add today, same views as mentioned in previous posts stands even now and we need to see if Nifty can make one more push and move itself above the critical level of 9800. That should settle things decisively in favor of Bulls ( if not already).

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Nifty Analysis: Outlook and Trend for 29th May 2020

Medium Term Trend: ↓Down (Changes to up above 9800)

Nifty Soars, Fills the Gap: Nifty followed up yesterdays rally with another strong rally and almost closed at 9500 levels up 175 points.

Nifty sudden rise may have taken most by surprise but regular readers of our blog are well aware that we have been expecting this move for quite a while now. We had even pointed out the entire pattern is reminiscent of May 2018 (2 years back) when Nifty had shown similar pattern ( read here Post dt 20th May)

In last couple of months Nifty has shown a tendency of repeatedly falling down after touching 9300-9350 levels however even then we had maintained that eventually this level will be broken markets may take some time to do it but it will  be taken out for sure.

Looking at the Nifty movement of last few days, there are strong indications that its broken for good now but we would like to see and observe markets for little more before confirming. Now lets take a step back and ref to our old posts where we had been mentioning about the significance of gap-down 'island reversal' area. Bearish Island reversal is a strong pattern and its appearance usually bring bad news for the bulls. Nifty had formed 2 back 2 back 'island reversals' and we mentioned that for any +ve scenario to unfold these gap down areas must be filled. Today Nifty has done a significant thing. it has filled the last gap down area. Now this should be read as a strong statement by markets and can bullish implications in coming days.

Nifty Hourly Chart

Filling this gap down area is the first step towards changing the medium term of markets which has been in 'down' mode since March. The next (major) resistance lies at 9750-9800 levels which is both , our critical turning point as well as the starting point of Island reversal area. If this gets filled then we can continue to see some strong bullish moves in times to come. However that doesn't mean that there wont be any pull backs. Of course pull backs will keep coming  but those could be utilized to enter long positions. When Nifty was trading at 8000-8500 we continuously were saying that this is not the time to panic but time to build portfolio from long term & one should start buying quality stocks.  Most stocks are up 10-20% from there. Reliance is up from 950 levels to 1500, Nestle is trading near new all time highs so is HLL and there are plenty such stocks.

Anyways, to summarise, Nifty has closed a key gap down area today which can have bullish implications in times to come. Next crucial resistance lies in 9500-9750 range ( big 250 points range). Pull backs are likely to come from time to time as markets are beginning to get overbought on short term charts. Hence some consolidation or sideways movement is likely and Nifty is expected to have strong support near 9200-9300 area and any fall which comes is likely to be restricted around these levels.

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Nifty Analysis: Outlook and Trend for 28th May 2020

Medium Term Trend: ↓Down (Changes to up above 9800)

& it jumped: Nifty moved perfectly in line with expectations and jumped almost 300 points to close above 9300 levels.

Please see what we had mentioned in last couples of posts:

Post dt 20th May:

"So now that we have made a close above 9000 levels, can we expect Nifty to move back to 9500 levels? I think we can, there are indications beginning to appear on charts which are suggesting a strong bull run in coming days"

Post dt 25th May:

"think its too early to conclude that markets are done with the current move. There is probably plenty of steam yet left in the markets and it can still move up from here. This nervousness and weakness could only strengthen the markets from here"

Also in the first half today (when the Nifty was trading around 9100) we had sent a tweet mentioning about the probability of an up-move and warned traders having short positions in the markets and within couple of hours Nifty obliged. Now this just shows the power of technical analysis and chart reading.

Regular readers must be aware that we have also been mentioning about an important resistance which exists in 9250-9370 levels ( bearish island reversal). Further gains are possible if this gap area is complete filled. We were hopeful of Nifty filling this gap when Nifty fell below 9k and still are hopeful. Today inspire of this strong up-move the gap is still not filled (though Nifty closed bang in the middle of it). Going forward we need to see if Nifty manages to move above 9370 levels and fills the gap. That will be a strong statement by the markets and an indication that markets wants to move much higher (back towards 9500-9800 zone where the second island reversal lies).

In Nutshell, Nifty continue to exhibit positive signs and if it manages to move above 9370 levels then further gains can be expected. As far as trading is concerned, we had entered long position at 8950 levels which contnues (amidst part profit booking) even now.

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Nifty Analysis: Outlook and Trend for 26th May 2020

Medium Term Trend: ↓Down (Changes to up above 9800)

9000 holds: Friday, Nifty opened strong but soon dropped below 9k levels once rate cut news was out. It managed to recoup some of the losses to close at 9040 levels down 70 points.

Nifty is exhibiting nervousness around 9100 levels which is understandable, it also dropped more than 150 points from the days high which also added to the nervousness. Having said this I think its too early to conclude that markets are done with the current move. There is probably plenty of steam yet left in the markets and it can still move up from here. This nervousness and weakness could only strengthen the markets from here. Remember most of the world markets were having bad day on Friday and HangSeng was down more than 1000 points, yet Nifty recovered and was down only 60-70 points which could be a sign that strength is rebuilding in the markets.

On daily chars, Nifty made a doji pattern which signifies indecisiveness and on weekly charts it formed an 'hammer' pattern which can be a bullish sign ( once Nifty start trading above 9160 levels).

In previous post we had mentioned the probability of Nifty moving towards 9500 levels. We still feel that is possible but need Nifty to sustain above 9150 levels however if markets fails to move above 9150 and drops below 8970 levels ( Fridays low) then probably things will start changing again.

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