Near Term Trend: ↓ (Down)
Market Update: Nifty opened with a gap down of 50 points and crashed to 10540 levels ( down 125 points) and made a sharp recover later to close around 10730 levels ( up 70 points).
As soon as Nifty fell below 10575 levels it went in an oversold zone on the short term basis. There was a likelihood of an Intraday bounce today hence we covered our shorts around 10546 levels ( initiated at 10858 levels last week).
Todays bounce can be termed as a technical bounce. Market was heavily oversold so short covering coupled with value buying lifted the markets. Todays bounce doesn't mean that Nifty is done with the down move as of now. We need to see further strength in Nifty to confirm that. For now our assumption is that its a corrective bounce and surely market can move up another 100-150 points form here but the downtrend should resume again once this corrective move is done. Off course everything will change if Nifty start showing strength in which case we will be forced to change our view. So we need to carefully observe how Nifty movement is shaping going forward and accordingly we will plan our next strategy. Overall today was a good day for our followers as we ended up making a profit of 300+ points in Nifty.
Trading recommendations. We exited shorts initiated at 10858 around 10546 today making a profit of around 310 Nifty points. Second trade (short) initiated @ 10684 on Friday is still open. for now current strategy is to hold on the balance shorts. If some one is long in market then use this bounce to exit your position.
Market Update: Nifty opened with a gap down of 50 points and crashed to 10540 levels ( down 125 points) and made a sharp recover later to close around 10730 levels ( up 70 points).
As soon as Nifty fell below 10575 levels it went in an oversold zone on the short term basis. There was a likelihood of an Intraday bounce today hence we covered our shorts around 10546 levels ( initiated at 10858 levels last week).
Todays bounce can be termed as a technical bounce. Market was heavily oversold so short covering coupled with value buying lifted the markets. Todays bounce doesn't mean that Nifty is done with the down move as of now. We need to see further strength in Nifty to confirm that. For now our assumption is that its a corrective bounce and surely market can move up another 100-150 points form here but the downtrend should resume again once this corrective move is done. Off course everything will change if Nifty start showing strength in which case we will be forced to change our view. So we need to carefully observe how Nifty movement is shaping going forward and accordingly we will plan our next strategy. Overall today was a good day for our followers as we ended up making a profit of 300+ points in Nifty.
Trading recommendations. We exited shorts initiated at 10858 around 10546 today making a profit of around 310 Nifty points. Second trade (short) initiated @ 10684 on Friday is still open. for now current strategy is to hold on the balance shorts. If some one is long in market then use this bounce to exit your position.
Just to further substantiate the above quoted statement
ReplyDelete"Market was heavily oversold so short covering coupled with value buying lifted the markets"
> Drastic increase in volumes in options trading, which indicates that market started profit booking and took new long position assuming undervalued NIFTY.
I am still new in F&O trading, may be Mr. Rahul throw some light on it.
Hello Sus, Its very difficult to pin point one thing which led to this conclusion. Every analyst has a different way of interpreting 'oversold' zone and it can be subjective. I follow technical indicators like RoC macd, RSI, KST, awesome indicator, ichimoku,bollinger bands etc to come up with the my conclusions. just to name one- if you look at hourly chart then you would find short term RSI fell below 20 in early trade.Now just because market is oversold it doesn't mean it will go up. Markets can remain oversold for extended period of times.so its not a reason to go long but its definitely a reason to book profit ( specially if you are getting 300+ point profit).
DeleteAlso just to add if you follow my updates daily then you would remember I had mentioned about 'exhaustion gap' few days back Nifty has been falling in straight line for last 3 days and todays gap down opening gave a perfect chance to bears to cover their position. market usually do not move in a straight line for more that 3-4 days so pull back was over due. So sometimes its not exact science but a bit subjective. As an analyst you have to factor in various things before you take a trading call ( sometimes you are right and sometimes you are wrong)
also to add, I have my own technical indicators too ( designed by me after years of study and experience) which help me in taking my trading calls. More than any other technical indicators I usually rely on my own methods and indicators ( which unfortunately I can not discuss or disclose here- Trade secret)
DeleteWhat a day it was, really interesting one. As told by you It opend gap down and kept moving southwards. Thanks for the guidance. .I am following you closely. Hope for the best for coming sessions and days and months 😀
ReplyDeleteThank you sir for your kind words. Ultimately its the markets who will rule. Just keep in mind that we are going to have some bad days too Ocassionaly :)
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