Medium Term Trend: ↑UP (Changes to down below 11750)
Nifty Marches Ahead: Nifty opened above 12170 levels and went on to cross 12200 with ease. It threatened to break below 12200 for some time but eventually settled at 12200 up 90 points.
Now that Nifty has successfully closed above 12175 levels and the way charts and other indicators are pointing, we can safely conclude that overall trend has changed to back up again.
Nifty had seen a huge fall of 500+ points (leading upto the budget & on budget day) previously prompting us to change the term to 'down'. There was a strong possibility that Nifty could revisit the lows of 11600 or lower and then only resume the uptrend however ultimately the price is the king and if charts are suggesting that the fall to 11600 was just a pull back ( and not a trend down) then we have to believe it. By closing above 12175 levels today, nifty has negated the bearish implication of most of the negative candles it made previously.
Now going forward, its likely that current rally will continue, ofcourse intermittent 100-200 pullbacks will keep on coming but the overall trend should remain on the upside. We expect market to have a strong support in the12100-12150 zone now (old resistance become support).
Another interesting development on the intraday chart is that the entire move of last few days ie., the fall to 11600 levels and now the pullback back to 12200 levels is looking like a 'inverted head & shoulder patterns'. Neckline of this pattern is also sitting at 12170 levels ( which also coincides with our trend reversal level).
In Nutshell, the overall trend of the market has turned back to bullish now and the trading strategy going forward should be to 'buy on dips' rather than to 'sell on rise'. Yes we were expecting markets to remain weak for some more time and test 11600 or lower levels and yes it didnt materialise. Our ultimate goal is to be in sync with market and to remain in line with market and since charts have changed we should change as well. From trading perspective, the band of 12100-12150 should offer good support now and if Nifty start closing below this range again then it will be the time to be cautious again.
Happy Trading!!
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