Medium Term Trend: ↓ Down (Changes to Up above 11720)
Testing crucial levels: Nifty opened flat but dropped to 11230 levels in the first hour of trading itself. 11220-230 failed to support markets this time & Nifty dropped to 11150 levels. It found some support there and closed at 11190 levels, down 95 points.
In last few posts we have been recommending buying in limited qty (for smart traders) with a SL of around 11220 and also mentioning that below 11220, the 11150 should again be used for initiating long positions. Nifty broke below 11220 and dropped to 11152 levels. For now, inspite of Nifty showing weakness daily we continue recommending buying on every dip ( as long as 11100-11150 level holds). This is a contrarian view we are taking while every analyst on TV and internet is recommending sell at every rise.
Reason we are still not bearish on Nifty is the fact that market is very close to critical levels which are important from long term perspective Nifty's near term/medium term may be down, the long term remains up & it makes sense to go long at these levels ( though it can be risky). Nifty is trading below 200 DEMA which is a bearish sign also it has broken below its key trend lines but the fact is that it continues to trade above 200 SMA and some positive divergence is also being seen on short term charts.
Overall the chances are that the entire fall we are seeing from high of 12K levels remains a corrective move. Last month ( 20th June to be precise) we had posted a near term trend for market ( link given below) and had mentioned that markets are likely to start a big move (on either side).
Now inspite of seeing a 500-600 fall from that level we are not convinced that markets have started a fresh bearish trend. The fall we are currently seeing is not carrying the characteristics we normally associate with a trending bearish move. Hence now the chances are increased that the markets may break on the upside.
In Nutshell, for now, inspite of markets being in a downmove, we continue to recommend buying on dips for risky and smart traders. Conservative traders can wait for markets to give a break out above 11400 levels on the other hand if 11050-11K levels break on the downside then whole perspective will change. A sharp upmove or a counter trend by bulls can not be ruled out from here.
Happy Trading!
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