Nifty Outlook and Trend for 24th Apr 2019

Medium Term Trend: ↑(UP)

Market update: Nifty Opened at 11600 levels and tried pushing its way up but met with a stiff resistance at 11650 levels. Once it became clear that markets are not able to push higher, Bears got active again and pushed nifty down below 11600 levels. It closed down at 11575 levels down 20 points.

 

Markets failed to cross 11650-11700 levels but 11540 levels was not broken either so for now there is still hope for bulls but that doesn't mean that one should go long here. Long positions should have been exited last week itself  (We already exited our longs around 11750/11800 levels last week itself). Now fresh longs are advised only above 11700-720 levels now.

 

Yesterday, Nifty had added around 29 lakh shares in 11700 Call (April), which has almost made it virtually impossible for Nifty to cross 11700 in this month ( atleast before expiry).

 

We had mentioned yesterday that Nifty must protect the lows of 11540 for next 3 trading sessions ( till expiry atleast). If this level is protected then there is still a probability of Nifty moving up further from here. One day is passed and Nifty somehow defended 11550 levels now remains to be seen if it can be defended tomorrow. weakness below 11540-520 levels will indicate that probably the near term top is done for now and the entire upmove which we saw recently ( 10600 to 11850) is ready to be corrected. Now to what extents it gets corrected will be something we need to analyse later only.

  

For now, same view as yesterday, keep an eye of 11540-520 levels & if it gets broken then more weakness is likely and on the other hand if it sustains and Nifty crosses 11700-11720 levels then we can hope to see another rally and higher levels in Nifty. Hence fresh long should be executed only above 11700-11720 levels. Medium term trend will change to down once 11500 level is breached. VIX is moving up daily and is sitting at 25 now, so if you decide to go long/short then keep in mind that markets can be choppy and intraday swings can be pretty huge so keep proper stoploss and then only trade.

 

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Happy Trading!!

 

 

 

Nifty Outlook and Trend for 23rd Apr 2019

Medium Term Trend: ↑(Up)

Market update: Nifty had a pretty bad day today, it opened weak @ 11680 levels and kept trading weak through out the day and finally closed at 11595 levels down 150 points.

We had mentioned in previous post that Nifty had made a "bearish belt hold pattern" and it can have strong bearish implications going forward. Well we didn't have to wait for too long and the weakness surfaced next day (today) itself and caught most traders by surprise. We had also been mentioning that overall Nifty seems overstretched and it can reverse sharply anytime and without any warning.

Nifty has fallen around 250 points in 2 days (from high of 11850 levels) and the fall has been pretty sharp however there is still some hope for bulls if Nifty can sustain 11550 levels. It had taken Nifty 4 days to rise from 11540 to 11850 and in just one day it has retraced around 75% already. Now if Nifty can hold above 11550 for next 2-3 trading session then there is still hope for Nifty going above 11850 levels again, however if 11540 level is taken out by bears then there is a serious risk of this uptrend getting over (for now). Sustained trading below 11540 wont be good for market in medium/near term.

Entire move from 10600 to 11850 levels needs to be corrected by market and till now this correction is pending (even if the overall trend is bullish a correction should still come). If 11540 is broken then probably we can assume the correction has begun now. Markets short term trend had changed to 'down' on Thursday and all long positions should have been exited on Thursday itself however if someone is still holding longs then keep a tight stop loss of 11540. Fresh long should only be initiated above 11720-730 levels now. Don't be tempted to buy Nifty even if holds near 11550 level for some time ( it may be another bull trap).

In summary, there is a real possibility that near term top has been posted by Nifty at 11850 levels, confirmation will come once 11500-11540 levels is taken out in next 2-3 days. If this level sustains then there is still some hope for bulls and a chance of Nifty taking another shot at 11900 levels.

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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!