Market Update: Nifty opened with a huge gap but recovered smartly to end the day up around 70 points at 10549 even though the news flow was all negative. Today was a classic example of age old rule of "buy on rumor and sell on news" (or vice versa). Nifty saw a recovery of more than 200 points from day low once the 'rumor' of BJP losing became 'news'.
It was a 4th consecutive gap down in last 6 days and eventually turned to be the "exhaustion gap" I spoke about in my previous post. I had mentioned yesterday that index usually turns after posting 2-3 gaps down and the next gap down could turn out to be an exhaustion gap meaning it gets retraced fully ( below is the excerpt of my post) and this is exactly what we witnessed today.
To understand it much better please see the below chart ( hourly chart). We had 3 gap downs in a row which Nifty was unable to recover from but today it was 4th gap down and nifty recovered it on same day itself. Idea here is not to boast but to educate readers about few basic technical parameters. One should not get carried away when gap downs/ups are taking place consecutively. It can be a good trading opportunity if you are able to identify the pattern
It was a 4th consecutive gap down in last 6 days and eventually turned to be the "exhaustion gap" I spoke about in my previous post. I had mentioned yesterday that index usually turns after posting 2-3 gaps down and the next gap down could turn out to be an exhaustion gap meaning it gets retraced fully ( below is the excerpt of my post) and this is exactly what we witnessed today.
To understand it much better please see the below chart ( hourly chart). We had 3 gap downs in a row which Nifty was unable to recover from but today it was 4th gap down and nifty recovered it on same day itself. Idea here is not to boast but to educate readers about few basic technical parameters. One should not get carried away when gap downs/ups are taking place consecutively. It can be a good trading opportunity if you are able to identify the pattern
Now when the election results out ( which are more or less as per mkt expectations), Nifty is happy to put the event behind and move on from here. Todays rally is basically a sigh of relief from Nifty. Market is range bound for now and hopefully in a few days the real trend should emerge. For now I am neither in Bull camp nor in Bear camp. Market is choppy and entering into a trading position at this stage will require a big stop loss so recommend waiting for few more days. As a trader we do not have to trade daily but keep observing markets all the time and as soon as the risk reward ratio is in your favor you should jump in. Lot of short position were entered today in the first half and then we had some short covering+profit booking by speculators which might continue for next few more days.
Trading recommendation/Trade update: No open position right now and I don't recommend going long/short at this stage. Market is being choppy and the big swings might cause you to get trapped or thrown out in no time. Happy Trading to you.
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