Nifty Analysis, Outlook and Trend for 31st Jul 2019

Medium Term Trend: ↓ Down (Changes to Up above 11620)

Carnage Continues: Nifty opened flat at 11200 and immediately touched a high of 11270 but familiar scrip played out once again and Bears dragged it almost 200 points from days high. It made a low of around 11070 and closed at 11085, down 100 points.

Nifty today broke below a crucial support of 11100 ( which was also the pre election low) We have been saying that as long as 11k-11100 level holds , the long term trend remains up and when the markets are so close near its long term support then only viable trade is on the long side.

 Markets are giving opportunities to exit long trades only intraday but its not sustaining. So even though 11100 was breached we still maintain out stand that a bullish move is possible from these levels. Last threshold or the final support lies in the range of 11K-11100 ( precise level is 11040). A close below 11040 and break of 10985 (even intraday) could prove to be a game changer. However as long as it holds possibility of Nifty giving a turnaround from these levels remains.

Today was the 9th consecutive day of this downmove, historically speaking max we see markets moving in one direction is ~10 days. Also Nifty might have broken below 11100 the equivalent level in Sensex is still not broken. Tomorrow could be a crucial day, we need to see if markets hits a new low but holds 11040 levels & after 10 day of sustained fall tries to recover and start some sort of a bullish move.

Another point to keep in mind is that this fall of last few days have brought down the medium term reversal level to around 11620 from 12100. If market holds the bottom around 11050 then a retest of 11600 is likely and crossing of 11600 will probably set the tone for 12K+ levels once again.

In Nutshell, its likely that the purpose of this fall is to just create panic and force out weak hands and if 11040 is sustained then markets start moving up again but in case 11040 is broken decisively then this view will not be valid & would change everything.

Happy Trading!