Medium Term Trend: ↓Down ( up above 11640)
Market update: 8th day and counting- Nifty fell yet again and closed down 20 odd points at 11280 levels. Actual close was around 11256 ( yesterdays low)
Bearish sentiments continues in Nifty and it keep falling. Prospect of BJP not getting full majority (satta market is projecting around 240 seats for NDA) along with weak global markets might be impacting sentiments for the immediate term. However sentiments cannot govern markets for too long so it will be interesting to see if Nifty continue to stay weak next week as well.
Most technical parameters remains on the bearish side and because of some sideways consolidation today, the short term indicators are not as oversold as they were yesterday. However market cannot continue to fall continuously, historically we have seen markets moving in one direction for max 9-10 days in row and now we have completed 8 days so a bounce back is definitely on cards in next 1-2 days. But the question is how far the bounce back will stretch and whether it will sustain there or not.
Situation has suddenly turned gloomy from euphoric. Few days back everyone was talking about 12K+ levels now suddenly in matter of 3-4 days skepticism is in the air and many analyst have declared that top is done for the year at 11850 levels and markets are headed towards 10500 and 10K. It might be true, not denying but in the midst of all this destruction and chaos there are still couple of things which are still positive ( even after the carnage we have seen).
Firstly, just look at the daily RSI, its sitting at 35. when was the last time RSI touched 35? answer is in March when Nifty was @10600. Continuous fall in RSI from here is only going to create some strong +ve divergences on daily charts.
Secondly, Nifty OI. Its abysmally low at 1.7 crores and in last few days it has lost a lot of open interest which suggest existing longs have been cut ( instead of new shorts being added). 1.7 is pretty low and indicate that the positions in F&O is pretty light and people are not leveraged at all. Historically speaking all major falls have been observed when everyone is heavily leveraged in the markets.
Now I am not suggesting that one should go and buy this market, offcourse not, all I am saying is not everything is gloomy and for bulls there is still some glimmer of hope left. For any bullish positions to emerge, as a first step, nifty should go on and cross 11550 in next week and start spending some time there. So if there is a pullback next week it should stretch atleast to 11550-11600 levels, if it fizzle out before that and market reverses again from lets say 11400-11450 or even 11500 levels then probably the last glimmer of hope for bulls would die too.
Happy Trading
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