Nifty Analysis, Outlook and Trend for 2nd Aug 2019

Medium Term Trend: ↓ Down (Changes to Up above 11500)

Weakness to the Core: Nifty Opened below 11100 and went on to break 11K and even 10900 intraday before a bout of short covering at lower levels pulled markets to 10985 levels. It closed down 140 points down to 10980 levels.

 

Nifty was down by around 240 points day at one stage however managed to recover 100 points in last 30 mins. We have been saying that as long as 11K is protected there is a chance of market bouncing back from these levels. We did see some intraday bounces ( like yesterday) but those were too shallow. We had also mentioned that close below 11040 or break below 10985 levels intraday will break the long term pattern. Todays closing is below 10985 levels and now the scenario has changed completely. There is a chance (a strong one) that even the long term pattern has changed now in favour of bear.

 

We were hopeful of Nifty sustaining 11K level, as it was something market had conquered after 3 months of sideways trading ( Feb-Apr). Now going back below the same level which took so much time to be crossed in the first place does not augur well for the near term.

 

The entire fall from 12103 was too slow which raised the doubt if the entire fall is just a corrective move, however as the time is passing by the speed of this fall is increasing which raises the question if the top was hit at 12K levels in July and not 12103 in may ( irregular top). Since markets hit 12K levels, the fall has been pretty sharp.

 

Now that we have had a close below 11040, it seems that  tables have turned and bullish possibilities have reduced to great extent. Since this  are was a critical support zone, we were optimistic and had been recommending long trades around 11150-11200 levels as there was a strong probability of market going towards 12K. It was a trade with good risk reward however it didn't materiliaze and we didn't see any sustainable major bounce. Having said this, now the flood gates have been opened and there is a strong possibility of nifty moving down from here. Of course the bounce of 100-200 points will keep coming in between but large trend should remain on the downside

The only way Nifty can Nifty open the bullish probability of 12K+ is by showing that todays breakdown was a false break. if its just a false break then markets should immediately move above 11200 levels. It should not hang around these levels for too long. Continuous trading below 11K-11150 zone could keep pushing Nifty down.

In Summary, the overall trend of markets have changed to down now and if weakness persists below 11K then Nifty  could head towards lower targets of 10500-10600 in near term.

Happy Trading!