Medium Term Trend: ↑(UP)
Market update: Nifty opened weak on Tuesday but once again buying emerged at lower levels ( around 11660) and pushed market back to 11750 levels.
The support area for Nifty is moving up with each day, earlier support was being witnessed at 11550 levels now its moved up to 11650 levels. Resistance too is moving down ( 11860 then 11795 and last week 11760). This contracting pattern is basically pointing to a triangle in making which indicates that after contraction is done prices will start expanding.
Now since this contraction is taking place at top most probably prices are expected to break on the upside however its not mandatory.
In previous post we had mentioned how the rallies are getting shorter. To negate this pattern we need to see current move (which began from 11550) to put on more than 310 points which translates roughly to 11860 levels in Nifty ( which is also the last top area).
Same pattern is witnessed on the hourly chart as well (rallies getting shorter) and the previous rally on hourly chart measured 130 points ( 11630-11760) and now the current rally has measured almost 95 points ( from 11660-11755 on Tuesday). Now if nifty adds further 30-40 points over Tuesdays high then it will break the current pattern on hourly charts ( as the rally will become bigger than 130 points).
Hence the two critical levels to watch out for are 11795-800 and 11860 ( both of these incidentally are the recent swing high as well). On the downside if Nifty break below 11650 levels then 11500-11475 can be tested. any major downswing can be expected only when 11475 level is taken out, till then trend remains up.
Happy Trading!
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