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!!
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