Nifty Outlook and Trend for 8th May 2019

Medium Term Trend: ↑(UP) 

Market update: Nifty had another bad day today and it dropped by another 100 points to close below 11500 levels.

There were many who were banking on 11550 level support believing it wont break but we had mentioned clearly in our update yesterday that there is a strong probability that 11550 wont hold this time. We had also mentioned that break of 11550 might create a panic in the market and it might invite further selling and that's how exactly Nifty behaved today, once 11550 was broken it dropped below 11500 in a jiffy.(Today was the 5th consecutive day of red for Nifty today).

We had also mentioned that as long as 11465-485-500 range is intact the medium term trend stays up for market. Nifty made a low of 11485 today so for now the trend stays up. We need to see if market takes support around todays low and attempts another pullback from here ( in which case 11750 levels can again be tested) on the other hand another bad day and break below 11460-485 levels ( closing basis) will change the Nifty trend to down for near term.

Nifty now has a very strong technical gap down ( made yesterday) which stands at 11640-11700 levels and its important that same is filled asap ( for markets to have any chance of testing all time high once again). If the gap holds and market start spending too much time below 11500 levels then probably we can say that near term top is done at 11850.

Nifty has been making rallies which were getting shorter and shorter ( which was a sign of weakness) hence the weakness in market is not entirely unexpected however the momentum and sheer force markets has shown on the way down is pretty unnerving for bulls. Also on daily charts, the last 20-25 day move is looking like a H&S pattern with a neckline at 11550 which was broken today ( if its true then can have severe bearish implications for markets in near term).

In nutshell, we need to observe if break below was 11550 today was just a false break intended to create panic in markets and whether markets take support at these levels and again start moving up or if this indeed is a fresh move on the downside and the markets are finally ready to correct the entire upmove we saw from 10600 to 11850 levels.


Happy Trading!