Nifty Analysis: Outlook and Trend for 21st Jan 2020

Medium Term Trend:  ↑ UP (Changes to down below 11770)

Nifty sees a breakdown: Nifty opened strong today above 12400+ but immediately drifted down and kept on slipping throughout the day. it closed with a substantial loss of 125+ points at 12225. Today Nifty has posted a 'bearish engulfing candle' on daily charts (which is a bearish pattern).

In the previous post we had clearly warned and mentioned:- 

"it needs a strong move above 12400-425 levels. In the recent times nifty has seen a steady rise from 11900 levels to 12400 so its very much possible that we see some sort of correction in next 1-2 days"

Now thats (again) exactly how the market played out immediately and Nifty gave up more than 200 points from the day high today and broken below 12300 levels. We had also mentioned (in previous posts) that 12300 is a good support but the way markets have bounced back from 12300 is not exuding confidence about the sustainability of the bounce and that market is exhibiting tiredness and lethargy at 12350+ levels which could result in markets giving correction(price wise or timewise) in near term.

Now that we have seen a sharp fall from 12400 levels to sub 12250 levels, we can safely say that the upmove for  extremely short term has ended and a correction has started. Please keep in mind that overall trend of the market remains up however for extremely short term , the bounce which began from 11900 levels ( last 8-9 days) seems to be over. Now this correction might last few days or it can get over pretty soon hence its very important to observe markets to see how the correction is developing. If the fall continues to be intense then it can fall towards 12050-12100 levels but shouldn't fall much below these levels. Break of this level could put serious question mark on the overall trend of the market so in likelihood it should hold.

For now we need to see if 12050-12200 level is holding up. If it does then probably the corrective move will be over in few trading sessions and a fresh move on the upside could be expected to start again but if its broken in next 2-3 trading sessions then probably we could see a retest of recent lows of 11900. Bears for now are back in game and next couple of days will decide if they hold their fort and make their position stronger.Ideal strategy would be to wait for this correction to get over and enter only when charts shows that correction is over and fresh upmove has started.

Happy Trading!

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