Nifty View: Update for 1st Feb 2019

 Near Term Trend: ↔ (sideways)

Market update: Nifty had a blast today. It opened with a gap up at 10700 levels and never looked back. Kept rising through entire session and closed at highest point of the day at 10830 up 180 points.

We had mentioned in our previous post that since last 3 months Nifty is playing a familiar script where it falls for 4-6 days and then rises for 4-6 days. So overall there is absolutely no movement and market is just dancing around at same levels in a tight range. After falling for 6 days (and touching 10580 levels) market has now started moving up. It will be interesting to see if bulls can maintain and carry the moment for more than 4-5 days. For nifty to break this tight range of 10500-10900 this 4-6 days of alternate bull/bear moves needs to break as well.

Coming back to todays movement, it was pretty strong and carry a lot of weightage specially since it has come just one day ahead of budget. We had also mentioned yesterday that presently there are 3 scenario developing and its possible that a) either market has started a new leg down or b) its just an X wave ( post which market will again start moving up) c) or its an extension of 'G' leg which is developing as an 'irregular correction'. We had also mentioned that the probability of market starting a new leg on the downside seemed more however todays market post the biggest rally of last 2 months and the sheer momentum and force with which market rallied are suggesting that markets are not yet done the idea of  testing higher levels and the last probability (continuation of G leg has become equally probable too).

Single day rally in a bear trend or a single day fall in a bull run usually doesn't mean much and one should not attach too much importance to it but if there is a follow up trading above 10830 levels tomorrows and market sustain those levels then the probability of market continuing this rally and testing higher levels will increase manifolds.

Overall from a positional trading point of view the January month has been pretty frustrating for traders. It started at 10800 levels and ended at 10800 levels too. It just didn't give any trending move/breakout whatsoever. However such period are often expected, I remember Jun'2018 was also one such month last year where Nifty just kept on moving directionless for a month and interestingly levels were similar too (10600-10900). So after a strong trend or after every 7-8 months, its normal to see such a directionless period that's how market tires out traders or frustrate them. One thing that can be said with 100% surety is that such markets do not last forever and sooner or later the real trend begins. More the consolidation bigger the trend that follows. To continue with my June'2018 example last year when the consolidation was over Nifty gave a movement of 1000+ points which was pretty much in one straight line. There were many traders who had given up after getting stopped out for 1-2 times but those who stayed reaped the reward later.
 
Like They say in cricket, "when a good ball beats you,you should just forget about it and focus on next ball" same applies for trading too. One should forget about  yesterday and focus on tomorrow.

Trading recommendations: like I mentioned yesterday if someone is short he can keep a SL of 10830-10840 ( so if one see a follow up buying tomorrow above todays high then he should exit) and if someone wants to go long he can go long above 10840-850 levels (provided those levels are sustained by market). Keep in mind due to budget the SL has to be big (10694)


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Nifty View: Update for 31st Jan 2019

Near Term Trend: ↔ (sideways with a downward bias)

Market update: Nifty opened 50 points up at 10700 levels but couldn't keep up the momentum and drifted down to 10620 levels. Some support at the lower levels saw Nifty closing at par at 10752.

Overall it was not a good day for bulls, even though there was no breakdown as such , bulls failed to add any gain above the yesterdays high which suggests the confidence to buy at higher level is lacking and for now Bulls just want to buy at dips.

As we mentioned yesterday, looking at recent history there is a trend of 4-6 days of bearish moves followed by 4-6 days of bullish moves. Market has been playing same script for last 2-3 months and same holds true even for now. There is a small possibility that market will remain range bound or +ve for next 2-3 days however if it fails to add any sizeable gain during this time then bears might get active again.

Overall it seems the risk on the downside are increasing a bit and there is a possibility that short term top is already done at 10987 levels and markets have already started a new leg down. However for now it just remains a possibility and if its true then we might see a dip from here to the lows of 10300 (or even lower) levels once again. Volatility is likely to be picked up because of budget and expiry tomorrow so be prepared for some wild swings

Technically speaking, It seems the G leg is over ( at failure point of 10930) and we have started a new leg on the downside, however there is still a possibility that either G leg is subdividing  or its just an X wave which means another corrective/sideways action will open soon. So any trading strategy needs to be designed keeping these thing in mind. Scenario is likely to become clear as the trading progress from hereon. If its an X wave then we should not break below 10340 levels ( election day result) and if its part of G leg then we can see a bounce from any where from 10500-10600 levels.

Trading recommendations: Markets are posing difficult questions right now (they always do that don't they). So one must be extremely careful in deciding the trading strategy. Whichever way one trades, the stop loss will be big. For now one should refrain from buying at current levels and wait for Nifty to cross 10800-820 levels first. If you want to short then one may use pull back for shorts ( by keeping a SL of 10840 levels) but keep in mind due to expiry and budget 100-150 point movement can come anytime triggering your stop loss. Less risky traders are advised to observe and wait till budget is out of the way.

We keep guiding and advising our subscribers through regular whatsapp updates as to what needs to be done during trading hours.If you wish to subscribe to our live whatsapp Nifty calls/trading recommendation then you may subscribe using below link:

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Nifty View: Update for 30th Jan 2019

Near Term Trend: ↔ (sideways with a downward bias)

Market update: Nifty opened at par after two days of heavy selling but drifted below 10600 and touched 10583 before some late buying coupled with short covering lifted the index and it closed just 10 points down at 10652 levels.

We had mentioned in yesterdays post that Nifty is appearing slightly oversold on the short term charts so a pullback/consolidation at these level is expected. Also it was the 6th day of consecutive fall in Nifty today and as the case has been since last 3 months, Nifty has max fallen ( made lower lows) for 6 days in row. A similar script played out today as well and after falling 70-80 points Nifty saw some pull back. Market has been directionless since last 2-3 months and there is a counter moves of bulls and bears taking place which last for 4-6 days in each direction. Now it will be interesting to see if Nifty can sustain the upmove/pull back it witnessed today and bulls take over for next 4-5 days. In other words we need to observe if market is playing the same script or it changes it.

Even though Nifty made a new low today and was trading weak throughout the day, the last hour pullback does give some hope to bulls and there still remains a possibility of Nifty moving up from these levels however it has considerably weakened now. Yesterday Nifty broke 10694 which was the previous swing low and today it broke below 10630 which was an earlier swing low. So Nifty has been making lower lows. Now the next swing low is sitting at 10530 levels and below that we have 10340 levels ( low made on election day result) which should be the final support for bulls. We had mentioned yesterday that another weak day will probably confirm that near term trend has now changed in favor of bears however even though we saw some weakness, it wasn't conclusive enough so we need more evidence to confirm that the trend has actually changed to down now ( for now it remains a strong probability).

Coming few days could be critical for Nifty, considering that budget is just round the corner there could be some spike in volatility ( as usually happens during budget). So traders are advised to keep positions light till then. continuous weakness from here below 10540 levels would suggest that trend has probably changed for time being. On the upside, 10750-10800 levels is likely to give stiff resistance. PCR (0.83)is totally in favor of bears at the moment so pressure is likely to continue till expiry atleast. Bulls can take heart from the fact that  Bank Nifty (even though is looking pretty weak) is giving a positive divergence ( for now). Also the market breadth was positive today and advance decline ratio was a healthy   31:19.

Trading recommendations: Same as yesterday,  There is a possibility that markets have started a new down leg at the same time since market is already fallen for 6 days & the pull back we saw today can be extended for another 2-3 days. Also the volatility is likely to pick up in short term because of budget. So if one must trade, trade light and trade with strict SL.

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Nifty View: Update for 29th Jan 2019

Near Term Trend: ↔ (sideways with a downward bias)

Market update: It was another bad for Nifty. It managed to open in a slightly positive territory but soon selling emerged and it kept getting intensified as the trading progressed and the pressure was visible till the very end. There was just one final small push from the previous low of 10630 which supported Nifty during the closing hours. Still markets closed with  a substantial 120 point loss at 10661 levels.

Overall it was another day where Nifty fell with momentum, actually the momentum was even stronger today than it was there on Friday. Nifty had a crucial support at 10692 which was breached with ease in the morning session itself. Bulls needed to defend it to rekindle any hope of an immediate revival but they failed miserably.

We had been saying that there was still a chance of markets pushing for one more leg up, however with todays fall the chances of a pull back have really reduced. Today the charts are telling a different story. Nifty had taken 5 days to rise from 10692 to 10987 and now it has retraced entire move in almost same time which is a classic sign of a trend reversal. However there are plenty of support available to Nifty between 10500-10650, also on the short term chart the markets is slightly in oversold territory so there can be a short term consolidation/pull back from current levels or 100-150 points down from here so if you are short/planning to short then please keep that in mind. On the other hand if we have one more bad day for Nifty then it will seal the fate conclusively in favour of bears probably.

Sine Oct'18 Nifty has max fallen 6 days in a row (during election result where it opened gap down and recovered fully by the time trading progressed). Now today was the 5th day of fall (lower low) in Nifty. So another fall tomorrow will make the current fall as the biggest fall of last 3 months ( time wise) and this is something which should not be taken lightly. Another thing which goes in favour of bears is that last 2 days fall has been in a straight line and seems impulsive ( there are no overlapping waves to be seen).

Technically speaking, we have been mentioning that Nifty making 7 leg diametric which is in its last leg (G). and we were expecting G to touch 11k+ levels. However now that we have a breach of 10700 levels ( which was the starting point of G) there is a high probability that G is over (as a failure) and a new trend down has started downwards. Nifty might still recover from here ( If G leg is moving as per irregular correction or if the fall from 10987 is just an 'X' wave). Traders should keep this in mind while planning their trading strategies.

Trading recommendations: Even though we were moderately bullish on markets we had exited our longs on Friday itself @ 10835 levels as the up move was not progressing as per the expected lines. Now going forward the trading strategy has to be prepared keeping these factors in minds i.e. a) Slightly oversold markets on short term charts b) Possibility of G leg getting finished and opening of a new leg down & c) Fall from 10987 as a connecting 'X' wave (which means another corrective will open soon). Don't recommend buying for now selling on rise with proper SL could be adopted ( with budget just round the corner volatility will be very high so trade light).

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Thanks for reading and happy trading!
 

Nifty View: Update for 28th Jan 2019

Near Term Trend: ↔ (sideways)

Market update: Nifty opened  on a positive note today above 10900 however fell flat again and saw an increase in selling pressure towards the end. It gave up 160 point from day high and finally closed 70 point down at 10780 levels.

Today bears ruled and they totally controlled markets no doubt about that. There were many indicators which were pointing to one more leg up in next few days to 11K+ levels. We were moderately bullish on the markets in near term and have been saying this for last few days. However  markets have shown they are not in the mood to go up immediately. So we were wrong in short term this time no two way about it and humbly accept the same but does that mean near term trend has turned bearish? Answer is no not yet (not in our opinion). let me try and explain.

Today when markets fell it fell with momentum and impulse (Something which was missing since last few days) but its a classic case of  "too little too late". In the very short term yes it might have some impact but overall in medium term perspective it doesn't change anything. Today is already the fourth day of the fall from 10985 levels. It had taken Nifty 5 days to reach 10987 from 10700 and now it has already consumed 4 days but 10700 is still intact. Fall we are seeing since last few weeks is having too many overlapping waves so for immediate short term may be yes we have momentum on the downside and the risk have increased a bit but overall it remains a corrective and sideways move which can stretch for few more days but not many.

We were of the opinion that time for choppiness and consolidation is over and Nifty should start breaking free but it seems some more time is pending for that. Since we saw some impulse in todays fall, its possible that market fall some more from these levels (even retest levels of 10600-10650 or even lower) but that would still be part of ongoing consolidation only which means a move up is still pending only thing which has changed is that it may not start from 10800-10900 levels as we were thinking initially but there is a possibility that markets go down a little more from here and then start moving up (from 10600-10700 or lower levels). We need to observe markets carefully over next few days to see how its behaving and accordingly plan our next move.

Another important thing to note is that ever since market hit 10K levels in Oct'18 it has always fallen 4 days  max in a row ( made 4 consecutive lower lows). Only exception is the election day result  time when Nifty fell for 6 days and hit 10340 levels. Now since 4 days have already gone we can expect 1-2 days for fall more before Bulls attempt to make another comeback. How successful they will be  that remains to be seen.

Trading recommendations: Considering the choppiness we are witnessing its prudent to sit on cash wait for markets to give a clear breakout first.  I don't recommend going short but waiting for right moment to go long.

Have a nice weekend!

 

Technical learnings: Types of correction (Irregular and flat)

Correction Patterns:

So what are corrections or corrective moves? Basically in simple words the correction is a movement in stock price which joins two impulses or trending moves. As the name suggests a correction is just  a temporary phenomenon and when they are over a trending move begins.

A corrective move is found between two impulses i.e. when a trend ends corrective move begins and similarly when a corrective move ends a new trend begins. Every impulse has five legs i.e. 12345 & leg 2 & 4 in each impulse are corrective moves or correction patterns. They are usually smaller price wise but bigger time wise than trending moves (1,3&5). They often presents a directionless trade and spend too much time doing nothing. Which makes them harder to trade.

Once markets have taken a big trending move it needs time to digest those move, corrective pattern help market digest previous move.

Below are the main Corrective moves or Correction pattern which can be found. 


Corrective Patterns



1. A-B-C simple zigzag : Simple zigzag is most simple and common pattern found . They usually found in wave 2 of an impulse. in such corrections wave A & C tends to be equal though sometimes wave C can stretch to 161.8% of wave A

2. A-B-C Flat corrective: Its similar to zigzag only thing is all the legs in such patterns tends to be equal. So entire correction is like a channeled move.

3. A-B-C Irregular correction: Irregular corrections are most confusing of the lot and are very common too ( they are also called expanded flat). In such corrections wave B will always cross start point of wave A, giving an impression that correction is over however just when everyone goes long prices turn down and C leg turns lower than end point of wave A which gives the impression as if a new trending move has started on the downside. However as soon as the wave C ends, the prices turns in opposite direction and the reversal is usually very fast and sharp, catching everyone with surprise. Irregular corrections when identified can be an excellent trading opportunities however its almost impossible to identify them in advance. But they can be identified when they are nearing completion or already completed.

Nifty View: Update for 25th Jan 2019

Near Term Trend: ↔ (sideways with a positive bias)

Market update: Nifty opened flat and traded in a narrow range of 10840-10800 through out the day. It finally gave a sharp pull back towards the end and closed up 20 points at 10850 levels.

Nifty though did make a new low, it failed to give any follow up selling below yesterdays low. We mentioned in our previous post that yesterdays fall was looking like a corrective move only and especially the last hour fall looked like an "after thought" and that it seemed to lacking any intent or purpose.. We had also mentioned that there are significant divergences to be seen and there is not much room for Nifty to go down.

More or less that's what happened today, whole day Nifty threatened to break below 10800 but it failed to do so as it had already run out of ammunition on previous day. Infact the last hour pull back today looked like a breakout on the upside.

Today markets failed to give any follow up selling below yesterdays low so the down move sort of fizzled out.However if we can see follow up buying above 10870 levels tomorrow then may be we can conclude that correction is over for time being.

Technically speaking, the entire move of last 4-5 days ( from 10850 to 10985 and then fall to 10800 levels) is looking like a irregular correction. If its true then expect a sharp up move from here on.

So overall no change in our view, inspite of 100+ point fall yesterday and todays consolidation, we still feel Nifty can see higher levels from here in short term. If our assumptions are correct then there is a high probability that consolidation and range bound movement we have been witnessing since last few days is now over and a clear trend may emerge soon.

Trading Recommendations: Markets continue to remain deceptive and is punishing traders who are trading on both sides. I don't suggest going short at this stage however if you are already short then you may keep a strict SL of 10910 levels. Long positions can be continued with a SL of 10750 (same as yesterday). Don't overtrade/leverage and manage your risks all the time. Next 2-3 days ( as we approach expiry) could be decider.
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Nifty View: Update for 24th Jan 2019

Near Term Trend: ↔ (sideways with a positive bias)

Market update: Nifty opened at par inspite of a massive 300 point fall in Dow overnight however it kept struggling entire day at its familiar resistance of 10930 and crashed almost 110 points in last hour trading to 10810 levels before finally closing at 10831 (down 90 points).

Nifty broke below its recent support zone of 10840-50 which has been supporting market since last so many days. So can we conclude that Nifty is in a bearish trend and has started a fresh leg downwards? We don't think so. Fall of last 2 days which we have seen is not convincing enough. Not only its lacking momentum, any sort of direction or purpose is totally missing from it. The entire fall from 10987 ( Monday) till date is looking like a A-B-C corrective. If you look at hourly charts you can see "A" leg of this corrective lasted for ~130 points ( from 10987 to 10860 yesterday) and "C" today  leg also consumed "130" points as well ( high of 10940 in morning to 10810 low it touched around 3PM). Of course we can see some more weakness from here but I wont be surprised if Nifty takes a sharp U turn from these levels ( there is a strong possibility of same).

Apart from the corrective nature of the fall there are other indicators like RSI which are giving strong positive divergence and in the current scenario (in our opinion) we do not see much room for Nifty to go down from here. We had mentioned yesterday that  as long as 10840 level is held there is a chance of markets giving one more push on the upside. Please keep in mind that support levels are important but the way they are broken or taken out matters a lot. Nifty may have broken out 10840 today but fall was not at all convincing especially the last hour fall looked like an "after thought". We need to see more weakness from here below 10800 -10750 levels to convince ourselves that its actually the beginning of a fresh bear trend.

In nutshell, for now, todays fall is just part of the same consolidation or choppiness which is going on since last so many days and it will be premature to conclude that market have broken free and a new trend has started down. Need more weakness/fall from here ( that too with momentum and force) to conclude the same.

Trading Recommendations: Markets are being deceptive and will continue to remain so for some more time. This is a difficult period for trading and traders who try to trade on both sides( bull one day and bear next day) are likely to lose a lot. If someone is holding Shorts he should book profits at these levels and longs can still be held keeping 10750 as SL.

Thanks & Happy Trading!!

Nifty View: Update for 23rd Jan 2019

Near Term Trend: ↔ (sideways with a positive bias)

Market update: Nifty traded again in the familiar range of 10930 -10850 for entire day. It dropped to 10860 levels after opening at 10930 levels but support came at lower levels and it finally closed at 10920 levels down 40 points.

For traders this range bound movement is becoming very frustrating and those who buy calls/puts are losing big time (doesn't matter whether you are buying call or puts) because of time decay premiums are falling rapidly. 25 days are gone by and Nifty is still trading around 10900.

Yesterday it looked like as if nifty has broken rage and finally moved on but market had other ideas and has clearly shown that it will take some more time before it decides to break free. However markets cannot continue like this in a tight range and sooner or later they will break free.

Overall market remains choppy and range bound. There is no change in our overall views and we still feel markets remains in a downtrend but as long as 10840 support is not breached we can see higher levels from here in short term. If 10840 is taken out then there is a possibility of markets testing 10700 level again. Even though the breakout yesterday didn't sustain that doesn't mean downtrend has started. We need to see more weakness to conclude that.

Weak Asian markets/global cues and falling INR/USD is weighing strongly on the markets also the market breadth was again negative today (2:3 in favor of declines) but PCR remains strong at 1.3 suggesting some support in near term.

Market remain treacherous and deceptive and like I said yesterday if you try to do too many trades in the current scenario then the chances you are going to lose. What we are witnessing is a classic corrective complex corrective which precedes any big trend in the market. This is markets way to shake traders confidence. One is bound to lose if hes continuously trading in/out anticipating a breakout on both sides. When the time comes and actual trend begins most traders would have already suffered enough losses in this range bound  market and would be scared of taking a position.

 If your capital is small then you must sit out and wait for clear trend to begin and trade only once this consolidation is over. Still if you wish to trade then best way to trade such markets is to trade in the direction of near term trend without worrying about intraday swings (don't change your stand basis intraday choppiness). Keep a tight stop loss/ target and keep holding position till either SL hits or target is achieved.

Trading Recommendations: Like I mentioned above if your capital is small then sit out till the time this consolidation is over and a clear trend emerges having said that, as per our view markets can still see higher levels from here so that is a real possibility even now. If you wish to subscribe to our live whatsapp Nifty trading updates/trading recommendation during market hours then you may subscribe using below link:

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 Good Day and Good Trading to You!
 

Nifty View: Update for 22nd Jan 2019

Near Term Trend: ↔ (sideways with a positive bias)

Market update: Nifty again opened flat today around 10900 and threatened to trade in the same familiar range of 10930-10850 for some time however a sharp rise after 30 mins of trading propelled  Nifty to 10950-10980 levels and opened a new range. It finally closed up 60 points around 10960 levels.

I have been mentioning since last few days that 10930 doesn't seem to be the top and one more leg up is pending in Nifty.To quote couple of my previous posts:-

Mentioned in our Friday post  (for 21st Jan)
"This grinding which we are witnessing around 10900 is not symptomatic of top formation. Not suggesting that Nifty cant fall from here off course it can but the congestion we are witnessing around 10900 is suggesting a probability of a throw up or one more leg up." link: http://niftywaveindia.blogspot.com/2019/01/nifty-view-update-for-21st-jan-2019.html

Mentioned in our Thursday post  (for 18th Jan)
" So there is a possibility of speculative shorting which is happening around 10900 levels. If some one is bearish then it makes sense to short Nifty at 10900-10920 with a stop loss of 10950 its a simple and easy trade isn't it? however markets are never that simple so I continue to believe one more leg on the upside is pending"

"Another important point to note is that yesterday Nifty broke above it recent high of 10850, today it broke above its previous swing high of 10924 (even though intraday and for a very very short time) now next high of nifty is placed at 10985 levels so there is every possibility of Nifty testing and crossing the same." link:  http://niftywaveindia.blogspot.com/2019/01/nifty-view-update-for-18th-jan-2019.html 

Anyways the sole point is that  Nifty had been  giving  indication since last many days that its not yet ready to fall (yet). That's the reason we covered our short position at 10700 levels and since then Nifty has gone up by 260+ points. Going forward even though Nifty is not running away its not breaking down either. Today it might have failed to cross its previous swing high of 10985 but Sensex did cross the same level and even gave a closing above the same so ideally Nifty should do the same too.

So in nutshell even though the risk on the downside still remains, I wont be surprised if we see higher levels from here but doesn't mean that one can go long at any point. Market remains tricky and one need to properly plan and manage his trade with a strict stop loss.

Technically speaking, we are in G leg of overall diametric and a clear trend is only likely to emerge once the whole pattern is complete ( you may refer to my previous post for the wave counts). Till then markets will be deceptive and one needs to be extremely careful while trading in/out.


Trading recommendation: For anyone short in the market ( though its not recommended) the obvious SL is 11K levels and long positions one can keep a SL of 10900. We have taken some trading position in last couple of days if you wish to subscribe to our live whatsapp Nifty trading updates/trading recommendation during market hours then you may subscribe using below link:

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 Good Day and Good Trading to You!

Nifty View: Update for 21st Jan 2019

Near Term Trend: ↔ (sideways with a positive bias)

Market update: Nifty opened flat inspite of the fact that all Asian markets were substantially up and even though SGX nifty was pointing to a higher open around 10950 levels. It turned weak during initial hours and threatened to go breakdown for a bit but eventually it recovered and closed flat.

Even though Nifty didn't give a crossover over 10925 the fact that it didn't break down below 10840 is a positive sign for the bulls ( same thing I mentioned yesterday too). In the morning the way market started moving down after opening  created an impression  as if nifty had started a new leg down however fall was soon arrested and Bulls pushed the nifty back to 10900 levels.

Usually when markets make a top the fall which follows is pretty sharp and markets don't hang around the top area for too long. This grinding which we are witnessing around 10900 is not symptomatic of top formation. Not suggesting that Nifty cant fall from here off course it can but the congestion we are witnessing around 10900 is suggesting a probability of a throw up or one more leg up.

Technically speaking, markets are making a diametric which probably is in its last let. Under normal conditions the G leg could extend for 7-10 days ( today was 4th day). I also mentioned yesterday that when some support/resistance becomes too obvious then it usually is taken out by a gap up or gap down opening so watch out for any gap up if happens during next week (it might trigger a short squeeze).

Globally, Dow had a very major resistance at 24K levels (S&P 2600) which was taken out yesterday. Nifty didn't fall when Dow was falling down so one may argue that Nifty wont go up when dow is going up which makes sense too. However this correlation ( or lack of) between Dow and Nifty cannot continue for long.

Another important thing to notice is the market breadth. It was totally tilted in the favour of sellers today (advance: decline-16:34).  Inner structure of market remains weak hence any trade must be properly planned and should only be taken with a proper SL. Over all structure of the market remains weak but near term is suggesting an upside.

Trading Recommendation: Dont suggest going short at this stage, and if some one is long he can continue with a SL of 10840. Rest depends on how market behaves during trading hours. If you wish to subscribe our live Nifty trading calls/ updates during market hours then pls use below link:

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Nifty View: Update for 18th Jan 2019

Near Term Trend: ↔ (sideways with a positive bias)

Market update: Nifty opened around 10925 levels however once again failed to break it and even dragged below 10850 before a bout of late buying pushed the index back to 10900 levels. it closed 15 points up at 10905.

I have lost the number of count 10925 level has been tested and markets failed to crossed it. Today there was a strong possibility that same would be crossed however once again markets failed to do so. Point to note is that all fall from 10900 levels are carrying the characteristics of a corrective fall and they are short lived and are getting retraced in faster time. So there is a possibility of speculative shorting which is happening around 10900 levels. If some one is bearish then it makes sense to short Nifty at 10900-10920 with a stop loss of 10950 its a simple and easy trade isn't it? however markets are never that simple so I continue to believe one more leg on the upside is pending.

On intraday chart nifty today made a 'hanging man' or ' hammer' pattern which signifies strength above 10930 and weakness below 10840 levels. when any support or resistance becomes too obvious then usually those are taken out by a gap up or gap down opening. So wont be surprised if we see that soon. On the downside if we see a follow up selling below 10850 then that would put serious question marks on the current leg of rally and the probability of Nifty going up from here.

Another important point to note is that yesterday Nifty broke above it recent high of 10850, today it broke above its previous swing high of 10924 (even though intraday and for a very very short time) now next high of nifty is placed at 10985 levels so there is every possibility of Nifty testing and crossing the same. I was hoping for 10980 levels to be tested atleast today however markets had different idea and it didn't materialize.

Technically speaking, no change in wave counts ( please see my previous post for the wave counts). I believe G leg  is still in progress and can see further upsides from here but things will change if 10840 is taken out now.

Trading recommendation: No change in position, same as yesterday. We are still carrying our longs and if someone is long he can continue with a SL of 10840.

Imp thing: After tomorrow, we will not be posting our trading details and trading recommendations ( entry exit points) here as we are turning paid and our trade recommendations will exclusively be reserved for our paid subscribers ( will continue to post my general market view though). In case you wish to join us pls follow below link ( subscription fee is kept as bare minimum as an introductory offer)

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 Thanks & Happy Trading to you!    

Nifty View: Update for 17th Jan 2019

Near Term Trend: ↔ (sideways with a positive bias)

Market update: Nifty opened slightly positive above 10900 levels but could not sustain above it. Whole day it traded in a narrow range between 10880-10925 and closed almost flat.

As per our views ( and like we have been saying since last few days) there is every likelihood or possibility for one more leg up in Nifty. We have seen too much congestion at 10900 range and it needs to be shaken up before market can resume its main trend. After a solid run of 150+ points yesterday the consolidation around 10900 level is a welcome sign for bulls. Even though Nifty didn't break above 10925 it didn't break down either.

I am not suggesting that worst is behind us and everyone should start buying and building portfolio. No, not at all. Overall there is no change in main trend of Nifty and its just that for a near term perspective there is a possibility of Nifty moving up.That is the reason we exited shorts @10700 and gone long above 10800 levels. Lot of people asking me we were selling Nifty earlier when it  was around 10900 and now we are buying. Well that's market for you, we will always do what charts tell us to do (off course we can be wrong at times) but as a positional trader we have to buy when there is a possibility of a move up and sell when there is a possibility of a down move, levels be damned.

I am not sure of up side targets but levels above 11K are a possibility even 11200-11300 can be seen. It will be difficult for nifty to go any higher than that but it can definitely go, no one should doubt it. It has not been an easy market to trade since last 2 months and I don't think it will be any easier to trade it in near term. You need lot of conviction and discipline to trade the present structure which is shaping up in Nifty.Falling INR/USD and  fragile global markets continues to pose a threat to Bulls.

Nifty Intraday chart

Now coming back to technical, there is no change in my view. Nifty is still making a diametric pattern in a diamond shape however only change I am anticipating now is that its not going to be a 'G' failure and probably G leg is going to go post a new high. I was expecting G leg to finish around 10925 earlier but it seems F leg got subdivided so the pattern still continues ( extension and subdivision are very much possible in a diametric). Please note Nifty can  terminate G leg below 10985 levels itself or even go as far as 11300 levels ( In my opinion second scenario is most likely but you never know).

Trading recommendation: No change in trading position, same as yesterday. Still holding our longs. Don't recommend going short at current levels and one should wait a little bit if he wants to short Nifty however if one is already short then he should exit at CMP or keep a tight SL of 10990 levels.If you have a small risk appetite and trading basis just your gut feel then you should sit out for some time and wait for picture to become clear first. When we initiate a trade we ensure trade is properly managed and we keep updating all our subscribers at every stage during trading hours as to what needs to be done. 

Imp thing: After Friday (18th jan), we will not be posting our trading details and trading recommendations ( entry exit points) here as we are turning paid and our trade recommendations will exclusively be reserved for our paid subscribers ( will continue to post my general market view though). In case you wish to join us pls follow below link ( subscription fee is kept as bare minimum as an introductory offer)

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 Thanks & Happy Trading to you!    

Nifty View: Update for 16th Jan 2019

Near Term Trend: ↔ (sideways with a positive bias)

Market update: Nifty opened on a strong note at 10800 and kept marching higher and finally closed at 10890 levels up 150+ points. Nifty saw good momentum on the upside after so many days and closed and added lot of points above the opening prices.

Till recently bulls were failing to add any points above the opening price levels however todays trading was different we saw good amount of buying and that too with good momentum. When we covered our shorts yesterday @10700 levels many were telling me that its not a right decision that too when market has given a breakout from the trading range (contraction). However I had been continuously mentioning in my posts that the first breakout would most likely be a false breakout just to lure in the unsuspecting traders.

 I also mentioned that yesterdays break out could be a 'bear trap'. That's the reason we exited and booked some 80-90 point profits in our short positions.Nifty gave a sharp upmove today and has proved that yesterdays breakout  below 10750 levels was just a 'bear trap'. We even added longs today @ 10822 then 10854 and just before closing @10885 levels. I also kept mentioning that one leg on the upside is pending and today (probably) Nifty has started that up leg already.

So what next? is the near term trend has changed to positive now? I would say probably yes but we need to see some more evidence before we conclude that. First hurdle is 10920 levels and after that a solid resistance at 10980 levels. We are not setting any profit target for now and will see when to exit basis how market behaves during upcoming trading sessions and will exit/book profits accordingly.

Overall please keep in mind that market still remains in a corrective mode and any upside can terminate anytime without giving any warning so pls be careful. All trades have to be properly managed keeping in mind many factors, so don't be reckless. Its not a market where you can blindly go long or short.

Trading Recommendations: We exited our shorts yesterday and booked profits @10700 levels and have gone long today. For now I don't recommend shorts ( one might get better shorting opportunities later on). If you are wondering why I have changed my stand from bearish to bullish positions then its because charts are telling me so. I will always do what charts are telling me and my motive is to be on the right side of market.

Imp thing:After Friday (18th jan), we will not be posting our trading details and trading recommendations ( entry exit points) here as we are turning paid and our trade recommendations will exclusively be reserved for our paid subscribers ( will continue to post my general market view though). In case you wish to join us pls follow below link ( subscription fee is kept as bare minimum as an introductory offer)

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Thanks & Happy Trading to you!


 

Nifty Trade Update -15th Jan 2019

Nifty Trade Update -15th Jan 2019

Update 10:05 AM:  Nifty CMP  10822 - Buy Nifty one part
Update 11:45 AM:  Nifty CMP  10854 - Buy Nifty one more part
Update 03:10 PM:  Nifty CMP  10885 - Buy Nifty 2 parts
 
Open Positions: 4 parts long
Nifty 2 parts @ avg 10838
Nifty 2 parts @ 10885


Update 18th Jan: These trades were closed @ 10880 ( all 4 parts)

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Nifty View: Update for 15th Jan 2019

Near Term Trend: ↔ (sideways)

Market update: Nifty opened with a slight gap down at 10750 levels and dropped sub 10700 levels intraday trading before closing at 10737 levels down 60 points.

10750 has been a formidable support for nifty and today Nifty broke it and even the contraction channel was broken on the downside still we have changed the near term trend to 'sideways' from 'down'. Lack of impulse or momentum in the current fall is raising question if its indeed the start of a fresh downmove or just a corrective move (which is extending time wise and price wise)

From trading perspective we decided to cover our remaining shorts around 10700 levels in the morning. There were many traders who went short today once the 10750 level was broken ( and market gave a breakout below the contraction range) thinking downmove has started. However for a downmove to begin there has to be an impulse which is clearly missing since last few days. Thats the reason we decided to exit. But it still doesn't mean that Nifty is turning bullish and should immediately go long. Market can still fall from here in next few days but the chances of same have reduced a bit for the time being.

So for now we need to watch Nifty movement closely for next few days and then see in which direction to trade. If we feel strength is returning to markets then we wont hesitate from taking a long position. As per our view, nifty should have seen the start of a downmove trend by now but since its still stuck in a range and that could mean one more leg on the upside is pending.

Technically speaking, we are still in a complex corrective and all we are saying is that probably Nifty will spend some more time in the correction zone before the actual downmove actually begins. So lets see how Nifty behaves in next 2-3 trading sessions we will accordingly see what needs to be done.

Trading Recommendation: We exited our balance short position @10700 levels and currently have no open positions. Like mentioned above we need to observe markets for few trading session to decide what needs to be done. 

Happy Trading to you!

Nifty Trade Update -14th Jan 2019

Update 12:26 PM:  Nifty CMP  10704 - Nifty cover balance short now. Position NIL

Open short Positions:
NIL

Nifty Weekly Charts: Inside bar pattern

Nifty View: Inside bar pattern on Weekly chart

In the morning I tweeted about Nifty making a "inside bar" pattern on weekly charts. Inside bar patterns occurs when Market trades between the high and lows of previous trading session. Here we are discussing weekly charts ( one candle for one week) hence 'inside bar' means for entire week Nifty failed to take out the highs and lows of previous week. This again point us in the direction which says markets are contracting and usually all contractions are followed up by expansion which might begin with an violent action.

Now why this pattern assumes significance is because this is something which is not very common, in 2018 it happened just 2 times and you can see both times it followed by a trend movement in Nifty.  Another point worth noticing is that last week candle was actually a Doji candle  (Doji signifies indecisiveness where open and close rates are almost same). So there are more than 1 or 2 factors which are saying that markets are ready to move from here now. 

Nifty Weekly chart

Markets can not remain in a range, off course they can spend some time in a narrow range but sooner or later they have to break. It happens because traders and investor get bored of seeing same prices day in day out. I do not want to predict the direction of the breakout however regular reader of my blog are aware that I have been bearish on Markets for quite some time so I wont be surprised if the breakout happens on the downside. I am bearish because charts and prices are telling me so but if charts changes tomorrow so will my views. As a trader, we have to be prepared for all scenarios ( including bullish ones) and while today charts are pointing down it can change anytime.

Just one word of caution, this contraction of range has become too obvious and most traders are now aware of it so don't be in any hurry to trade the breakout even if that means losing 40-50 even 100 points. I don't think it will be easy to trade going forward even though you  knows that break out is going to happen. Reason I say so is that  Initial break out may be (I say may be) a false breakout so first let market show that its actually broken out and trend has begun. No one can time the markets and no one can buy at bottom and sell at top so don't even think about doing so.

Nifty View: Update for 14th Jan 2019

Near Term Trend:  ↓ (Down)

Market update: Nifty opened at par and as the trend has been recently, failed to add any points above the opening price but at the same time support came when Nifty turned lower and touched 10740 levels. Market finally closed at 10795 levels down 25 points.

Bulls are supporting market whenever market turns lower and 10740-10750 area has turned out to be a formidable support for Nifty. Please note its in line with our view that market is in 'contraction' mode and support area is moving up and up ( 10340 /10530/10630 now 10740).  Similarly the resistance area is also coming down. Bulls are supporting Nifty at every drop but at the same time failing to take Nifty higher above the opening prices.

Overall it was again a lackluster day of trading where Nifty didn't make any kind of move and volatility was missing. This calmness in the market is probably just the silence before the actual storm comes. One should keep light position and trade with a strict stop loss. Divergence continues between Bank Nifty and Nifty and key oscillators still suggesting that Nifty remains in a down trend. Nifty made a lower low today and made a closing below yesterdays low which is definitely a weak sign. However markets have a tendency to bounce back after 2 bear candles (today was the 2nd bear candle on intraday chart). So we need to observe markets for signs of strength in the next 1-2 trading session.

Technically speaking- diametric is still in formation, prices remain in contraction mode and trading range is getting shorter and shorter everyday. Going forward it will not be easy to trade as there is every likelihood that this contraction will first see a 'false breakout' first to suck in the traders. So pls don't get carried away after seeing a sudden spike out of this range, observe the markets and then only take a trading call.

Trading Recommendation: We exited our one part short today @10810 levels (initiated at 10840)now just carrying one part. Still don't suggest going long at this stage. For now one  should carefully observe the markets and then only take a trading call. Like I said volatility can increase anytime trapping you on wrong side so pls be very careful. If you must trade then trade with a strict stop loss.

Have Nice weekend!

Nifty Trade Update -11th Jan 2019

Update 10:40 AM:  Nifty CMP  10810- Nifty cover one part (50%)short now. Hold balance short ( 1 part)

Open short Positions
Trade 1 @ 10840 ( 1 part)
 

Bank Nifty, RSI and Nifty

Strong Negative Divergence- Bank Nifty with RSI & Nifty

This is one important development taking place since last few days.Bank Nifty is consistently showing negative divergence with RSI and Nifty. Divergence happens when Price move upwards but the oscillators ( like RSI) moves downwards. This shows even though the price is moving up the strength is missing  and such up moves are not to be trusted with.




Bank Nifty Divergence with RSI & Nifty

Here you can see bank nifty is consistently moving in upward trajectory while the RSI ( relative strength index is making lower high. Similarly even the Nifty is making lower highs. With so many negative divergences all around, this is the time to be careful off course divergences can continue for long and sometimes even reverses too. But this is not something one can ignore and should be definitely be part of your analysis while you are devising your trading strategy.

For a genuine bull run I would ideally like to see no divergences.

 

Nifty View: Update for 11th Jan 2019

Near Term Trend:  ↓ (Down)

Market update: Nifty opened at par ( even though SGX was indicating a positive open) and kept drifting in a narrow range today and finally closed at 10825 levels  (down 30 points). It was a pretty listless trading session ( yes you may call it boring) and Nifty made an "inside bar" meaning high and low of yesterday were not breached.

Even though todays session was boring, it assumes lot of significance. I had mentioned in my yesterdays post that " the sharp pull back in last hour has potential to change the trend for Nifty for short term" Bull needed to trade strong above 10870 levels today to bring some strength in markets however they failed once again. Even though Market didn't fall, the inability of bulls to take market higher above the opening prices ( since last 4 days) is weighing heavily on the markets and it assumes a lot of significance in the near term.

There were also a probability if the sharp pull back witnessed yesterday was indeed a 'bear trap' but now the chances of same are almost zero.

Bank Nifty is consistently giving divergence with Nifty, looking at bank nifty chart ( even though I don't track it) I can see its looking much weaker and today while Nifty fell 0.3% Bank Nifty fell 0.7% generally its not very often that one see divergence between bank Nifty and Nifty and sometimes when its there ( not saying always)it might be a sign for something bigger which is cooking in markets.

Another point worth noticing is the negative breadth of the market. Since last few days the declining stocks are outnumbering the advancing stocks ( even though Nifty was rising) which again raises the concern if the distribution is going on in the markets (and to me its nothing but distribution only).

Still no change in my Bearish view, doesn't matter how much pull back Nifty gives and for how long it consolidates till the time I see the actual strength in the prices I wont change my stance. It took Nifty 3 days to reach 10870 levels ( from lows of 10630) now to start a new leg downward, Nifty must break 10630 in next 2 days ( sound difficult? lets see).

Again I reiterate, even though the volatility was totally missing today ( sharp contrast to yesterday) it can increase anytime now so please be very careful while trading and keep the qty in check always. if you feel you have made a wrong trade then don't hesitate to cut your loss and exit. If market catches you on the wrong foot, it will wipe your 100% capital in no time.

Trading recommendation: No change in views still. We are carrying our shorts initiated at 10840 levels ( exited our previous shorts around 10700 levels). Many traders are adding long/shorts and getting chopped and suffering losses on both sides (which happens during sideways trading). For now one must avoid compulsive trading and trade only if you are reasonably sure. Don't recommend going long at this stage so if you are holding longs then either exit or keep a tight stop loss.

Good Day and Happy Trading to you!




 

Nifty View: Update for 10th Jan 2019

Near Term Trend:  ↓ (Down)

Market update: Nifty opened on a strong note at 10870 levels and kept trading in a tight range for most of the day. There was violent fall in second session and index dropped to 10750 levels and immediately staged a smart recovery of 100+ points to close above 10850.

Markets were extremely volatile throughout the day. I have been mentioning in my posts everyday that volatility is likely to be picked up and if one is not careful or try to be too adventurous, hes likely to be trapped by market in these choppy moves. Today many traders got trapped on both sides and suffered heavy losses. Todays move was just one small example and one needs to be extremely careful about trading in such markets.

Overall, today was another day where Nifty dropped first and then recovered from day lows but at the same time not able to post any gain above the opening price. I mentioned in my yesterdays post that "Bulls are supporting market on every drop but are not willing to invest further above opening price" same thing we got to see today as well. So much of choppiness is suggesting that markets are preparing for its next move ( up or down) and its likely to  be violent and should come soon now ( surely choppiness can remain for few more days but that doesn't change anything)

Prices are still contracting, if you ignore the intraday volatility then Nifty has been able to add just 50 points today which is still very much within threshold of 'contraction'. If you notice daily charts, it took Nifty 3 days to fall from 10916 levels to 10630 and now it has taken 3 days to retrace around 80% of the fall. Ideally bulls would have liked to see full 100% retracement by now ( we still need to see how tomorrows trading goes because on Sensex chart this down move took about 4 days).

We maintain our bearish stance for now, however todays sharp pull back is capable of changing Niftys trend for short term as todays last hour move felt like a perfect 'Bear Trap' (depends on how Bull take it from here).

Trading recommendation: No trade is recommended at these levels. if someone is long he can square off his position and wait for markets to give confirmation and enter again. We are still holding 2 parts short ( 10840) and even though temptation was high to add shorts below 10800 levels we resisted as the nifty movement was not convincing. Many intraday traders did enter short below 10800 levels today were seen running for cover in last 30 minutes). 


Happy trading to you!