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!
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!
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