Market Update: Nifty was totally in Bear grip today and momentum on the downside (which was missing yesterday) was clearly visible. Frankly speaking todays fall has come as a surprise to me as I wasn't expecting Nifty to go below 10750 and finally 10650 levels. this zone was a major resistance area for Nifty and it took more than 3 weeks for Nifty to cross this hurdle and once this was crossed I expected it to hold. But market always surprises and we should always be ready for all probabilities. So what does todays fall indicate? Does this mark the beginning of a new Bear trend? Probably no. Though Bears have surprised bulls with their power today, the overall structure still remains bullish. let me explain.
It took Nifty 5 days to touch 10930 from 10500 levels and till the time Nifty breaks 10500 in faster time the bullish trend stays (as per Neo wave, for new trend to begin the last move should be retraced in faster time). Today was the third day of fall from 10900 levels. So if Nifty breaks 10500 levels tomorrow then we can say that Nifty has started a new leg downwards.
On daily chart Nifty is still making higher highs and higher lows which confirms that market is still in bullish mode. Fall stretching beyond here will definitely mean that things are changing. Also, on daily chart as well as hourly chart clear divergence is visible between RSI and Nifty and Nifty is oversold on short term charts. So it will be very tough for Bears to carry on with the same momentum from here.
So even though I exited our longs today at 10630 ( bought at 10650) I am still not in bear camp. Need to observe market behavior for next 1-2 days to take my next trading call. Todays fall has definitely changed and altered few wave counts I was assuming ( will try to post an updated wave count tomorrow).
So to summarize, Nifty is down but not out ( not today atleast). As a trader once you are with trend don't change your stand till you have conclusive proof. At the same a bigger mistake would be to keep sticking to your stance even when market has shown you otherwise. So for now we will stick to your original stand but will not hesitate to change once market start telling us differently.
Trading recommendation: Longs were exited today @ 10630 (bought at 10650) with a small loss of ~20 points. Due to gap down openings on last 2 days I couldn't exit as per original SL but when you are doing positional trading at times this happens. Now need to observe nifty for 1-2 days before taking a fresh call. I don't recommend going short or long at this point as Nifty is trading in no mans land and can move either way.
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