Near Term Trend: ↑ UP
Market update: Nifty continued with its weak trend and inspite of a strong overnight rally by US stocks Nifty tanked and closed below 10800 levels.
We had mentioned yesterday that bulls have their back at the wall and one more nudge will probably push Nifty in the bearish zone. Although we did get that nudge today and Nifty even broke below its crucial support of 10800-10820 we still would like to see and observe markets a little more before we conclude that trend has indeed changed down. Reason for not doing so even now is the lack of momentum. We don't have the momentum which ideally we should have seen. Nifty has lots of things going against it, like:-
Now we may ignore most things but lack of momentum is something which can not be ignored. When market falls without momentum its usually a sign of corrective fall. Now a corrective fall can extend and move a bit higher/lower than the expected levels but all corrective moves result only in one thing i.e. markets reversing when they are over. Now we are not saying with absolute surety that its a corrective fall, its just that the indications we are getting are suggesting and there is a possibility. Now market can start building momentum from tomorrow onwards and prove its not a corrective fall which can certainly happen but for now we need to see more evidence. There is no harm in waiting on sidelines if one is not sure.
We have seen that market broke below 61.8% retracement level (10787) today but it was not very convincing now we need to watch next critical support level ( 75%-80%) which stands at 10716-10690. Now this level assumes lot of significance as the entire rally we saw ( 10583-11118) actually started from this level only when Nifty opened with a gapup at 10690 levels on 31st Jan.
So in nutshell, nifty continues to be weak and one should continue to be observant and watchful for some more time and if one must trade then trade with strict stop losses. We need to see if Nifty respect 10700 or even that is taken out in coming days.
Happy Trading!!
Market update: Nifty continued with its weak trend and inspite of a strong overnight rally by US stocks Nifty tanked and closed below 10800 levels.
We had mentioned yesterday that bulls have their back at the wall and one more nudge will probably push Nifty in the bearish zone. Although we did get that nudge today and Nifty even broke below its crucial support of 10800-10820 we still would like to see and observe markets a little more before we conclude that trend has indeed changed down. Reason for not doing so even now is the lack of momentum. We don't have the momentum which ideally we should have seen. Nifty has lots of things going against it, like:-
- It has returned to the range it broke after 2 month of hardwork (back to below 10900 levels)
- Broke below 61.8% retracement level of the recent rise today ( 10787) though marginally and adjusted closed was just above it
- 4th consecutive day of lower low (closing below previous days low consistently)
- Breaking below previous week low ( 10822)
- Making top ( 11118) on a day of good news and +ve sentiments (rate cut)
- Lack of momentum: Momentum is missing for most part and if you analyze hourly chart you will notice that most falls are coming only in last hour
- Positive divergence in RSI ( which still continues on some time scales)
- PCR (1.2) dropping but continues to be in favour of bulls
- Lower VIX: Inspite of markets falling daily VIX is not budging and not moving up
Now we may ignore most things but lack of momentum is something which can not be ignored. When market falls without momentum its usually a sign of corrective fall. Now a corrective fall can extend and move a bit higher/lower than the expected levels but all corrective moves result only in one thing i.e. markets reversing when they are over. Now we are not saying with absolute surety that its a corrective fall, its just that the indications we are getting are suggesting and there is a possibility. Now market can start building momentum from tomorrow onwards and prove its not a corrective fall which can certainly happen but for now we need to see more evidence. There is no harm in waiting on sidelines if one is not sure.
We have seen that market broke below 61.8% retracement level (10787) today but it was not very convincing now we need to watch next critical support level ( 75%-80%) which stands at 10716-10690. Now this level assumes lot of significance as the entire rally we saw ( 10583-11118) actually started from this level only when Nifty opened with a gapup at 10690 levels on 31st Jan.
So in nutshell, nifty continues to be weak and one should continue to be observant and watchful for some more time and if one must trade then trade with strict stop losses. We need to see if Nifty respect 10700 or even that is taken out in coming days.
Happy Trading!!
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