Nifty Outlook and Trend for 3rd May 2019

Medium Term Trend: ↑(UP) 

Market update: Nifty again had a volatile day ( in a small range though). It kept swinging wildly in 11700-11780 range for whole day before settling at 11725, down 25 odd points.

Yesterday we had mentioned that 11795 is the immediate critical level for Nifty ( and after that 11850-60) today nifty made a high of 11790 but couldn't cross/sustain it. Market is consistently seeing some selling pressure at 11750-11800 levels at the same time buying is emerging whenever Nifty drops by 80-100 points.

Market is in a narrow range and the range is contracting on daily basis and once this contraction is complete probably we will see expansion in prices. VIX again moved up today and closed at 23. VIX has risen more than 60-70 in last few weeks ( probably due to election result). But rising vix is highly indicative of the fact that prices are not going to be contained in a small range for too long and one should not be surprised to see wild swings in the market.

Nifty might have failed to cross 11790-800 levels but it has spent too much time around 11750 zone ( today was the 5th day in a row when Nifty touched 11750 intraday) and so much of congestion around 11750 could mean that one more leg of Nifty is still pending on the upside. If 11800-850 was the topping zone , we should have seen some bit of fall by now. Usually when tops are made they make an inverted V shape (🔺) which means top area is visited for a short time (once or twice probably) and prices reverses swiftly from there . Too much trading around top could mean that accumulation is going on and market can rise further. this remind me of 10985 levels in Jan/Feb markets kept reacting from 10900 levels but eventually broke it.

Having said this, market is still making rallies which are getting smaller and smaller and the move from lows of 10600 is overstretched and has already put on more than 1200+ points and it still to be corrected hence a word of caution.  However if market falls from here it can take support at 11500 levels and no serious downmove is expected as long as 11475-500 is intact. On the upside keep an eye at 11795-800 levels and 11860 levels as breach of these levels can trigger further buying in short term.

Happy Trading!!