Market Update: Nifty had another bad day and crashed below 10500 levels and ended up closing almost 200 points down. Todays fall was significant as it broke below the previous low of 10490 however it took Nifty 5 days to do that ( the previous rally from 10490 to 10950 had taken 5 days too). If you remember I had mentioned in my previous post that Nifty needs to break below 10500 in 4 days to signal a start of fresh downmove however Nifty refused to go down on Friday and gave a huge gapdown today. Break below 10490 in 5 days ( equal time) is counted as a negative too however the negative/downside impact of the same may or may not be that severe. Further on the hourly charts, the fall looks slow.
Thursday market was oversold on short term charts and I had said further fall from here looks difficult. And on Friday (inspite of a 100 point rally), I had mentioned that downside risk has increased recently and Nifty might slide down below 10600 again. Bullish scenario has changed now and I am not in a hurry to long anytime soon. Please note that momentum on the downside is increasing and even after a 200 point fall nifty is not oversold today.
Technically speaking this is the 3rd consecutive gap down we have seen in last 5 days which is unique and usually after 2-3 such gapdowns Index turns and the next gapdown becomes what you call an "exhaustion gap". Meaning if we see another gap down then its likely to get retraced fully. We still have some +ve divergence on hourly charts with RSI and couple more indicators are still in positive zone but its definitely not in buy mode and don't recommend buying at this stage. There are contradictory signals in Nifty present so waiting it out for few days is the best strategy. Presently the election/exit poll result is ruling the market sentiments and this could cause few more wild swings in near term. Further weakness from these levels would suggest that Nifty is likely retest 10K levels however it might just give a sharp pull back once again before it decides to do so. I was bullish at 10600 and even when Nifty was at 10900 but have been proven wrong (but no significant loss suffered in trading as our entry point was low) and things changed once market broke below 10650 levels. Now we need to observe how market is behaving in next 2-3 trading sessions before taking our next trading call. As of now risk reward ratio is not in favour of trading (buy side as well as sell side).
Trading Recommendations: Our last trade ( buy at 10650 was exited at 10630) was closed on Thursday and like I mentioned above, we need to observe how market is behaving in next 2-3 days before taking next trading call. For now I don't recommend going long or short at this stage as the wild swings in market can throw you out in no time.
Thursday market was oversold on short term charts and I had said further fall from here looks difficult. And on Friday (inspite of a 100 point rally), I had mentioned that downside risk has increased recently and Nifty might slide down below 10600 again. Bullish scenario has changed now and I am not in a hurry to long anytime soon. Please note that momentum on the downside is increasing and even after a 200 point fall nifty is not oversold today.
Technically speaking this is the 3rd consecutive gap down we have seen in last 5 days which is unique and usually after 2-3 such gapdowns Index turns and the next gapdown becomes what you call an "exhaustion gap". Meaning if we see another gap down then its likely to get retraced fully. We still have some +ve divergence on hourly charts with RSI and couple more indicators are still in positive zone but its definitely not in buy mode and don't recommend buying at this stage. There are contradictory signals in Nifty present so waiting it out for few days is the best strategy. Presently the election/exit poll result is ruling the market sentiments and this could cause few more wild swings in near term. Further weakness from these levels would suggest that Nifty is likely retest 10K levels however it might just give a sharp pull back once again before it decides to do so. I was bullish at 10600 and even when Nifty was at 10900 but have been proven wrong (but no significant loss suffered in trading as our entry point was low) and things changed once market broke below 10650 levels. Now we need to observe how market is behaving in next 2-3 trading sessions before taking our next trading call. As of now risk reward ratio is not in favour of trading (buy side as well as sell side).
Trading Recommendations: Our last trade ( buy at 10650 was exited at 10630) was closed on Thursday and like I mentioned above, we need to observe how market is behaving in next 2-3 days before taking next trading call. For now I don't recommend going long or short at this stage as the wild swings in market can throw you out in no time.
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