Medium Term Trend: ↓ Down (Up above 12010)
Weakness to the Fore : Nifty opened positive around 11635 levels but immediately started falling and kept falling through out the day in astraight line, it made a day low of around 11400 and closed at 11420, down 180 points.
If Nifty had a bad day yesterday (fall of ~100 points) then it had twice as bad day today and fell more than 230 points from day high. Yesterday we had mentioned that there was some positive divergence on the short term charts and markets might attempt to hold 11575-580 levels. Well it did try to bounce back but the effort lasted just 30 mins and Nifty was down below 11580 levels (after testing 11640) within first 30 mins itself and once it broke below 11530-525 levels it was clear that this move was actually a fresh down leg and now that it had made a new low ( below 11460), same is confirmed.
In fact last 6 days rise ( from 11460-11700) has been completely retraced in just 2 days time. This in itself explains that markets are completely in downtrend now (We had also mentioned that continuous weakness below 11575 would indicate that corrective leg is over and fresh down leg has started).
In fact last 6 days rise ( from 11460-11700) has been completely retraced in just 2 days time. This in itself explains that markets are completely in downtrend now (We had also mentioned that continuous weakness below 11575 would indicate that corrective leg is over and fresh down leg has started).
Another point worth noticing is that today Nifty has completely filled the gap which it had made on election day ( 11400-11691) though on Sensex its not 100% filled. Now that we have made a new low below 11460 levels the next critical level to watch out for is 11325-350. Need to see if market tries to take support at these levels and attempts another shot towards 11700 levels. Continuous weakness from here and below 11325 levels could accelerate the fall & push Nifty to 11100-10900 levels.
In summary, the move was from 11460 to 11700 was indeed a corrective move which seems to have completed and Nifty has started a new impulsive move on the downside. No long positions are recommending now ( all long positions should have been exited as soon 11580 was taken out in the morning) and short positions can be maintained with a SL of around 11525 levels. Need to see if this impulsive move tries to find some support in the 11325-400 zone. Future trading strategies has to be built after seeing how Nifty behaves in 11350-400 zone.
Happy Trading!
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