Tuesday, March 12, 2019

Nifty Outlook and Trend for 13th Mar 2019

Near Term Trend: UP

Market update: Nifty posted an exact replica of yesterdays trade today. It opened +ve with a gap & kept on moving higher throughout the day. The rise & gain of last 2 days have perfectly been in a sync.

Last two days buying frenzy has pushed markets into overbought zone though markets can remain overbought for long still a little bit of cooling off is expected soon now ( even if not a selloff). Today was the 3rd consecutive gap up by markets. In one of our previous post we had explained the concept of 'exhaustion gap'. After 2-3 consecutive gaps the next gap can be an 'exhaustion gap' meaning it gets filled up. So if market again opens with a gap, then one needs to be careful as usually all such gaps are filled intraday/next day & sometimes the move can be strong and it fills all previous gaps( first gap in this scenario occurred at 11K levels). Continuous running gaps are indicative of a bullish behavior where buyers feel they have been left out and they just go all out scrambling to buy. This behavior is also called 'panic buying' ( opposite of panic selling where everyone just offload their holding fearing capitulation in markets).

Last  2-3 weeks Nifty movement is looking like a start of a new trend however there are couple of things which are suggesting that it may not be a new trend. Firstly It is too slow and secondly its coming off too late. Bank Nifty posted a new lifetime high today but broader market is lagging bank Nifty.

For now technically, it remains a corrective move and like we mentioned yesterday, today was 93th day of this corrective move (previous move was 38 days) so we have spent almost 250% time. Next 5-6 trading session ( middle of next week) would complete 261% hence warning caution at these levels. Nifty may run from here every things possible but it is also possible that this is the last leg on the upside which might trap traders on the wrong foot.

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