Nifty Outlook and Trend for 1st Apr 2019

Near Term Trend: ↑UP

Market update: Nifty opened again with a 50 points gap at 11630 levels however dropped to 10575 levels before bouncing back again to 10620 levels. it closed at 10620 up 50 points.

Yesterday we had mentioned a possibility of Nifty making a double top at 11565 levels (if Nifty had fallen below 11500 levels) however since markets made a new high that probability is not valid now. Having said this the entire move from lows of 10600 is getting over stretched and appearing to be in its final leg since quite a while now  ( In our wave count we are counting it as wave 'C' of ABC of second corrective). Let me explain.

lets analyze wave count of recent move from 10585 to 11630 (todays high)

Wave 1= 10585 to 10880 = ~300 points and took 4 days

Wave 2 =10880 to 10730 = ~150 points (high point of wave 2 was 10930 as it was an irregular correction, so the fall could be measured as 200 points too but that doesnt matter)

Wave 3= 10730 to 11560 = ~830 points ( ~278% of wave 1)

Wave 4= 11560 to 11320 = ~240 points

 Wave 5= 11325  to 11630 = ~300 points & has taken 4 days as well ( matches wave 1)

Usually wave 5 matches with wave 1 especially if its part of overall corrective pattern ( wave 5 of wave C).This can also be read as final leg of final leg.

There is no doubt that markets are in a uptrend however evidence after evidence are piling up that a serious correction can begin any time. Market remains euphoric, over bought and seeing strong negative divergences on multiple indicators ( daily RSI etc).  Many feel that Nifty is already done with the correction ( fall we saw last week when Nifty fell to 11320 levels) however it was too small and too shallow to be called as a full correction of entire wave. It may be a correction for one of the inner wave of the move (wave 3) but the entire move has still not been corrected and a fall is still pending and overdue now.

In any trend retail traders or the common man is usually the last one to enter ( wave 5) and that's when the trend ends, if our wave count is correct then wave 5 is ongoing ( and achieved similarity with wave 1 today) and last 3-4 days markets is seeing lots of euphoria and optimism which could be a sign of common man entering now hence there is good chance of this move getting over (for now).

Coming back to entire move from lows of 10k (Sep last year) to 11630, the total time has reached around 276% now ( which is rare). Though we did see some correction exactly from 261.8% levels it was still part of the ongoing move only and the total corrective move still continues. Now crossing 261.8% is not common and but still within rules of Neo wave. Considering all these possibilities probably markets are trading in borrowed time now. On price charts it continues to trade positively hence trend remains up but like we mentioned earlier as well, it can change suddenly and without warning.

Happy Trading!

Nifty Outlook and Trend for 29th March 2019

Near Term Trend: ↑UP

Market update: Nifty opened around 11470 and kept adding strength as trading progressed and closed at 11570, up 120 points.

Todays close assume lot of significance as the close has come above the recent high and above yesterdays high so that definitely is a sign of strength. All technical indicators continues to remain in 'buy' zone as well. However one thing which didn't seem right in todays rally was the negative divergences seen all around (on most time parameters and with most indicators). Daily RSI has shown a very strong negative divergence which calls for some caution at current levels.

Both Sensex and Nifty closed around recent high and it needs to be seen if market can build further strength over it or again slip back to below 11500 levels from here (If it happens then probability of a double top like scenario can arise).

Nifty has a good support at 11200-250 levels and till this level hold the near term trend will remain up only however one should also keep in mind that technically markets are overstretched and inspite of recent correction it remains on the overbought side. Looking at PE is sitting at 28+ levels now and last time it had reached 28+ was way back in 2008(6300) & then in 2018 (11750) and on both occasion we did see a good fall.

Market sentiments continues to be on very bullish side and euphoria is reaching extreme levels as we approach elections. Markets are probably factoring in BJP victory but how far elections can take markets that remains to be seen. Another thing to keep in mind is that since last 4-5 days  market has seen a movement of 100-150 points on each day. Now this again could be significant factor as we move forward ( big movement can become new norm now).

In nutshell markets remains buoyant and trend remains on the upside however considering various other things there is also a probability of markets making a short term/medium term top so be cautious.


Happy Trading!!


 

Nifty Outlook and Trend for 28th March 2019

Near Term Trend: ↑UP

Market update: Nifty opened strong today (infact with a gap up) and went on to touch 11540 levels but couldn't sustain the momentum and dropped below 11500, touched a low of 11430 and finally closed at 11445 down 40 points.

Yesterday we had mentioned that its important for Nifty to sustain above days high (11490) and to cross 11560 levels. However while Nifty opened above 11500 it couldn't sustain the momentum and crashed 100 points from day high. This is not a sign of strong markets and raises questions if yesterdays pull back was merely a temp pull back. If we see further weakness tomorrow below 11430-11400 levels then probably we its going to test 11320 levels again ( or even lower).

There is lot of euphoria and optimism right now in the markets ( Nifty Apr future at 100 point premium??) where everyone is super bullish and expecting markets to touch 12k+ levels ( especially after Goldman Sachs upgrade). But key thing to note is that Nifty is still below the level it was trading at the time of upgrade. All these upgrades and downgrades may not work directly & immediately. Many times we have seen bottom beings made at the time of downgrades & top being made when there are upgrades ( now not saying that this is how its going to work even now) but sometimes smart money uses these events to enter/exit markets so one should not give too much importance to them. If nifty has to move up, it will move up even if these agencies downgrades India. In Summary, market movement determines upgrades/downgrades and not vice versa.

Now coming back to Nifty, since markets have failed to close above yesterdays strong move (which felt like start of a new uptrend) there is a possibility that it was just a bull trap to lure in last of the investors or to get rid of weak shorts which had entered markets in last few days. To reaffirm its bullish stance now Nifty needs to cross 11540 11550 levels and close above it but if it slips below 11400 levels then weakness might persists for times to come.

Timewise/price wise we continue sit at important levels and the high hit by nifty 11560 levels was exactly at 261.8% levels ( which we kept mentioning in our previous posts). So one needs to be super cautious now. There does remain a possibility that markets have already hit a near term top and might reverse from here but the charts are still exhibiting strength and there is plenty of support at 11200 levels and till the time this level is not taken out, the near term trend will remain strong.

Happy Trading!



 

Nifty Outlook and Trend for 27th March 2019

Near Term Trend: ↑UP

Market update: Nifty trend opened tentatively and stabilized around 11370 levels before shooting up to 11490 levels in second half. It closed 130 point up at 11480 levels.

When markets are in a trend the counter trend movement usually don't extend beyond 2-3 days and that's what we witnessed today. Todays movement was pretty strong and important thing was that Nifty filled the gap it had created yesterday ( that takes out the bearish implication of the previous gap down). Now if markets can sustain above 11490 levels and goes on to cross 11560 levels then probably we are going all the way to 11750 or higher.

However its not given that markets are done with the correction and the entire range 11560 to 11320 should be observed carefully as the break on the either side could prove to be decisive. If nifty again reverses from here and goes on to break 11350/11250 levels then bearish implications will surface again.

In nutshell nothing much to add today. Nifty remain in a uptrend ( corrective or impulsive doesn't matter) and weakness it was showing since last 2 days has been negated to much extent by todays strong bullish move. Now we need to see if todays move is genuine move and whether its able to sustain ( if Nifty again reverses from here then probably it was just a false move) on the other hand strength over todays high and a cross over above 11565 levels will signify that the current up move has some more steam left & markets may see higher levels from here.

Happy Trading!

Nifty Outlook and Trend for 26th March 2019

Near Term Trend: ↑UP

Market update: Nifty trend was bearish today, it opened with a gap down at 11360 and moved even lower at 11320 levels. Some late buying pushed it up slightly and it closed at 11350 levels down 100 points.

Nifty was overbought and prices were stretched on the upside hence a correction was due (overdue rather). We had a huge fall in US stocks Friday evening and same was followed by most Asian markets today including Nifty. We had mentioned in our previous post that suddenly most global indices are aligned and there is a strong probability that global markets may move in tandem from here onwards ( follow Dow). In other words the under-performance or the over-performance we have been seeing from Nifty may not continue for long now.

Coming back to our markets, now that we have seen the much awaited correction is it safe to assume that nifty is ready to resume its uptrend? Not really. Today Nifty opened with a gap down and the gap was sustained through out the day and so far the entire fall of last 2 days ( from 11565 levels) is carrying good momentum and force. Now if this gap is not filled in next couple of trading sessions then Nifty might slip slightly more to 11200-250 levels as a result of bearish implications of this gap down. Overall from a near/medium term perspective the trend still remains up and unless Nifty break below 11200 levels with force, it will remain so.

Near term trend of Nifty remains up but we had mentioned in previous post that technical are suggesting that probably the near term top is done at 11565 levels ( due to various time/price cycles we have been mentioning) and todays gap down has done little for us to discard this theory.

In Nutshell, If Nifty is still in uptrend then this wave of correction should not extend much below 11200 levels and Nifty should soon conquer the gap down it has posted on chart today (11420-11370). If the gap is filled in next couple of trading sessions then probably Nifty will continue with its upmove and post a new high even above 11750 but if this correction drags for few more days and goes on to break below 11200 followed by break of 11100 levels then probably we can conclude that top is done already.

If someone is long and still holding ( ideally all longs should have been exited at 11500 levels) then it would be wise to book profit at these levels and enter again only once 11450-11500 levels is surpassed.

Happy Trading!

Nifty Outlook and Trend for 25th March 2019

Near Term Trend: ↑UP

Market update: Nifty opened  again in the green today (on the back of 200 point gain in Dow Jones) however couldn't sustain and dropped to 11435 levels and finally closed at 11456 ( down 65 points).

Markets were trading in overbought zone for last few trading sessions and like we had mentioned in our previous post that  after 8-9 days of consecutive one sided moves,  a reversal can always be expected ( today was the 9th day).

We have also been mentioning that time wise market is about to complete 261.8%  retracement ( and that 250-261.8% is the generally the max which is observed however even 300% is possible which is rare). Ever since market completed 250% time ( day 94) we were telling traders to be cautious and yesterday mkt completed 261.8% and today we saw a small reversal or a pullback.

However inspite of everything it will be premature to say if market is done with upmove yet and the levels of 11600 will not be seen in immediate term. Today market has taken just a small step back and that doesn't change the overall structure of the markets and it still remains pretty strong However if selling pressure increases from here and market break below 11200 -11150 levels with strong momentum then probably we can say that medium term top has been put in place already.

Having said this  the technical reading is still suggesting a bit of caution here and indicating a probability that Nifty hit the medium term top today/yesterday however it will be confirmed only when we see follow up selling from here that too with lot of momentum and force.

So keep observing markets for next few trading session and if its just a correction developing then it may finish in next couple of trading sessions and without much prices damage however if its a trend reversal then we might see some sharp moves.

Another important thing to note is that during last few months there was a complete disconnect between Dow and Nifty and both were moving independently.Now if one observe charts carefully he can notice that both are standing at same level (Nifty is just few %age points away from all time high & so is Dow & S&P). Even other global markets can be seen at same level hence theres an increased likelihood that divergence or lack of correlation we have been accustomed to seeing between Dow and Nifty is getting over and probably global markets are ready to move in tandem now. So its important to keep an eye on Dow now because what it does from here onwards can be significant and it can lead the way for other markets from now on.

Happy Trading.

 

Nifty Outlook and Trend for 22nd March 2019

Near Term Trend: ↑UP

Market update: Nifty opened slightly in green & kept trading in a small range between 11510 11560 & finally closed flat at 11520 levels down 10 points.

Even though Nifty closed slightly in red, Sensex posted yet another +ve close ( 8th in a row). 8-9 days of a consecutive move in one direction is the max which is seen. Few days back when Nifty fell from 1118 to 10585 levels then too we had witnessed an 8-9 days of straight fall.

Markets continue to remain overbought and everyday it keeps getting deeper in the overbought territory on multiple indicators. However price movement remains on the bullish side and there is no sign yet that its done with the upmove. But keep in mind price movement can turn anytime without any warning so one needs to be very very careful now.

Nifty completed 261.8% retracement today ( in terms of time). It was 99th day of the move from lows of 10K. 250%-261.8% is the general retracement level seen ( max is 300% but its rare). Indicators after indicators are suggesting that markets may correct from here now how deep or long the correction going to be that remains to be seen. Daily RSI is hovering around 80 which is historical high ( higher than even Aug 2018 when Nifty was at 11750).

Overall not much change in our view, markets remain overbought and getting tired now so a correction is definitely round the corner now how deep or long it will be or whether it will be a shorting opportunity or a buy opportunity, that remains to be seen.

Happy Trading!


 

Nifty Outlook and Trend for 20th March 2019

Near Term Trend: ↑UP

Market update: Nifty had another positive day today (7th in a row). After trading in a narrow range throughout the day it jumped above 11500 levels and closed at 11530 (up 70 points).

Markets yesterday had posted a Doji and needed a strong close above it today to negate its impact. While Nifty managed to close above it just by couple of points , Sensex failed to do it & the close is still below the high of Doji it posted yesterday.

Daily RSI has crossed 79 today & markets keep getting more and more overbought. Sentiments are turning bullish and Nifty OI has been seeing a steady increase in last few days ( now back to 2 crore+). Having said this the price movement is not giving any negative indications and all momentum indicators continues to be on 'buy side'. Goldman sachs upgraded Indian markets to 'overweight' which has added to positive sentiments.

Till the time price movements gives any sell signal it will be premature to say if this rally has finished. Hence near term trend continues to remain up however this is the time to be super cautious as markets can give a sharp pullback ( even if its just a temp correction) anytime. If some one is looking to buy then it would be wise to buy on dips only, let markets corrects itself and then buy. Markets never move up or down in a straight like they always move in  a zig zag fashion and once you see markets moving like a straight line for a considerable amount of time then you can always expect a course correction.

We continue to trade near very critical levels and today it was 98th day of the entire move ( from lows of 10K) in next 1-2 days we will complete 261.8% retracement (time wise).So if this entire move is just a corrective move ( which it seems like) then next couple of days could be crucial. Sentiments are turning into super bullish (especially after Goldman Sachs upgrade) which is further warning cautions at current levels.

Happy Trading!
             

Nifty Outlook and Trend for 19th March 2019

Near Term Trend: ↑UP

Market update: Nifty (again) opened strong at 11470 levels and went on to hit 11525 levels from where it dropped 100+ points to 11410 levels before a late bout of recovering pushed it back again to 11470 levels. Nifty finally closed at 10462 up 35 points.

Today was the 6th day in row where markets have closed in green. Nifty made a doji candle on intraday chart, it closed at same levels where it had opened after making a high and a low. So no real body just long shadows ( signifying indecisiveness)

 If you analyse last 3 days of candle, you can see  :

Day-1 Exhaustion gap- Mkts opened strong but couldn't sustain
Day-2 Inverted hammer - Mkts opened strong but gave up most of the gains in late trading
Day-3 Doji - Mkts again opened strong but immediately gave up all gains and couldn't conquer the morning highs inspite of some late buying.

This is reflecting some bit of apprehension and skepticism at higher levels. Nifty is very hot right now its trading in extremely overbought zone yet there is a feeling among traders that markets may just run up from here and they would miss the pre election rally hence lower levels continue to see some buying support for now.

In last post we had mentioned that Nifty need a strong close above 11485 levels to counter the bearish impact of inverted hammer. Markets did open strong but capitulated later and failed to give a closing above 11485 and in the process posted another Doji. So now Nifty needs a strong close above 11530 levels.

Today was the 97th Day of upmove and like we have been saying we are nearing 261.8% level of retracement ( time wise) hence next few trading sessions could be crucial, markets are getting overheated and a correction is definitely round the corner now ( small or big only time will tell).

Having said this the near term trend remains up but keep in mind due to various factors things can quickly change. So don't be complacent if you are long keep booking timely profits or keep a strict stoploss.


Happy Trading


 

Nifty Outlook and Trend for 18th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty opened strong at 11370 levels and went on to touch 11480 levels before giving up a sharp fall towards 11400 levels towards the end. Nifty finally closed at 11425 levels ( up 80 points).

 Nifty opened strong but it wasn't technically a gap up opening ( open rates were lower than yesterdays high) so the exhaustion gap market made yesterday stills stands. We have been saying that markets are trading in overbought zone & today they went into extreme overbought zone. When Nifty was trading at 11480 the hourly RSI was as high as 90. Now we are not sure when was the last time such extremes levels were seen. Having said this please keep in mind that market can remain overbought zone for many days/week even months.  Daily RSI crossed 75 which again is an extremely overbought zone. It remains to be seen  how market come out of this zone ( Through time correction or price correction or both or trend reversal).

We continue to believe markets are in corrective mode even though last few days rally seems like a fresh impulsive move but its not. Its carrying all the characteristics of a corrective move and it remains a part of overall corrective move which started from 10K levels in Oct'18. In terms of price wise we have completed 80% retracement today ( which was always a technically possibility) however to achieve that market has spent 250% time already and by next Wednesday it would have completed 261.8% of time.

Also, another thing to note is that Nifty today made a inverted hammer type of pattern which could have bearish implications if its high ( 11485) is not conquered in next couple of trading sessions.

Hence  we need to closely observe and see if markets changes its trend/tone in next 3-4 days/coming week. If market continues to remain strong and doesn't give up much ground then probably we are stretching towards 300% time correction ( which is a rare but a possibility nonetheless) which will add further 10-12 days to this corrective move.

One interesting thing happened today, VIX added 6% even though Nifty was simply marching upwards. This could be a sign that smart money or big players are getting jittery and expecting volatility to rise in near term. Even we believe ( infact have been seeing for quite a while now) that volatility could increase from here and side ways trend will not continue for long now ( infact sideways trend seems to be over already).

Few days back we had mentioned that Nifty OI has dropped to historic low (1.45 crores) whereas average is around 2 crores. Traders were getting tired of Nifty sideways movement and hence exiting. Now today the open interest is back to 2.06 crores. So probably traders who exited around 10600-10700 levels have again started buying & coming back into markets.

In nutshell, we repeat what we said yesterday. Observe market carefully for next few days, a correction (big or small) is definitely round the corner but it remains to be seen if it would just be a correction or eventually turn into something more than just a correction.

Happy Trading!






 

Nifty Outlook and Trend for 15th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty opened with yet another gap at 11380 levels but couldn't sustain and dropped to 11310 levels but bulls prevented any further drop and it finally closed flat at 11340 levels.

We had mentioned in previous posts that Nifty has already given 3 gaps and after 3 consecutive gaps (which sustained) the next gap is likely to be an 'exhaustion gap' meaning it is not sustained & filled up on same day/next day. Nifty opened at 11382 (with a gap of 32 points) but filled it within first hour of trading itself. This is in contrast to what Nifty has been doing recently (i.e, opening with a gap then building further on it).

Markets have been trading in overbought zone for last few days and they looked pretty tired yesterday. Same is the case today, even thought Nifty closed flat, fact that the closing has come below the gap up area is probably indicating some cooling off to come in near term. Also we have completed 95 days today which means overall corrective pattern has finished exactly 250% of time ( of previous fall from 11750 to 10K). In next 4 days we will be completing 261.8% so it will be interesting to see if market changes its direction/trend or tone in next 1-4 days that will give us some hint on overall direction market may be planning in medium term.

Nifty has turned overbought and has given a strong rally in last few days so a correction is definitely expected. but please keep in mind this could be just a correction which means it will be a buying opportunity however if Nifty goes on to break below 11100-11070 levels in next 3 days and then goes on to break below 11K level as well then probably we can say its a start of new trend on the downside.

We are sitting at crucial levels both in terms of price and time hence lots of caution is required. Sideways movement we have been witnessing for last 2-3 months is probably already over ( evident from the fact that markets have started moving strongly now).

In nut shell keep an eye on Nifty for next 3-4 days as its movement in near term could be prove to be very crucial.

Happy Trading!!