Medium Term Trend: ↑UP (Changes to down below 11750)
Nifty Marches: Nifty opened strong above 12K and after flirting with 12100 levels, it managed to make a close above it & added about 140 points.
Nifty had seen a big cut on Monday & Tuesday where it went on to test 11900 levels but today it erased all the losses for current week and now trading above the closing price of last week( and more importantly 12100 levels).
In last post we had mentioned that 12100-12150 is the support area for nifty and its possible that markets are creating an inverted H&S pattern which carries bullish implications. Nifty couldn't manage to hold 12100 levels and thus negated the H&S pattern that did change the trend for very short time but overall there was no change (from medium terms perspective) and Nifty remained in bullish trend. Nifty broke below12100 levels on monday which brought further weakness and made bears go active again and they managed to pushed Nifty all the way back to 11900 but like we mentioned earlier, Nifty continued to remain in bullish zone and attracted buying at lower levels which has put nifty back again above 12100 levels today.
Now lets step back a little and see how things are developing. Nifty rose all the way from 11600 to 12150 in about 4 days and what we saw after that was a (possible) complex correction. Now thing about complex corrections is, when in progress, they are nearly impossible to identify hence impossible to trade. However good thing is that when they get over they usually offer some good trading opportunity however traders are already frustrated seeing markets going up and down in a complex correction so they do not risk a new trade when a new trend starts ( fearing reversal yet again).
In complex corrections markets make new high and break previous bottom yet it remains a correction. Here nifty dropped from 12150 levels to 12000 ( 170 points) then from 12K levels Nifty made a new dash towards 12240 levels and again dropped below 12K ( which was the previous low). Now interesting thing to note here is that Niftys new high at 12240 (last week) was ~90-100 points higher than previous high ( 12150) and when it dropped to 11900 then its low (11900 yesterday) was again 90-100 points lower than previous low (12000). So both the b & c leg of this correction seems to be perfectly synchronised or proportioned. Nifty action during last few days might seem chaotic but there is an order in chaos if once notices carefully.
While we believe its a complex correction, there is also a chance that the entire move from 11600 is developing like a bearish extracting triangle ( which has 5 legs) and nifty is currently forming leg 5. We need a strong move above 12170-12200 to cance the probability of Nifty making extracting triangle.
So just to summarise, inspite of last 2 days maniac fall, Nifty still remains in upmove and the fact that it has closed above 12100 yet again, makes this a strong possibility. For further sign of confirmation, Nifty needs to move above 12175 & 12250 levels in next few trading sessions.On the downside the gap area between 12010-12050 is likely to offer strong support and if Nifty makes a close below 12K levels, then again the entire structure needs to be revisted.
Happy Trading!!
Nifty free buy/sell
Nifty Marches: Nifty opened strong above 12K and after flirting with 12100 levels, it managed to make a close above it & added about 140 points.
Nifty had seen a big cut on Monday & Tuesday where it went on to test 11900 levels but today it erased all the losses for current week and now trading above the closing price of last week( and more importantly 12100 levels).
In last post we had mentioned that 12100-12150 is the support area for nifty and its possible that markets are creating an inverted H&S pattern which carries bullish implications. Nifty couldn't manage to hold 12100 levels and thus negated the H&S pattern that did change the trend for very short time but overall there was no change (from medium terms perspective) and Nifty remained in bullish trend. Nifty broke below12100 levels on monday which brought further weakness and made bears go active again and they managed to pushed Nifty all the way back to 11900 but like we mentioned earlier, Nifty continued to remain in bullish zone and attracted buying at lower levels which has put nifty back again above 12100 levels today.
Now lets step back a little and see how things are developing. Nifty rose all the way from 11600 to 12150 in about 4 days and what we saw after that was a (possible) complex correction. Now thing about complex corrections is, when in progress, they are nearly impossible to identify hence impossible to trade. However good thing is that when they get over they usually offer some good trading opportunity however traders are already frustrated seeing markets going up and down in a complex correction so they do not risk a new trade when a new trend starts ( fearing reversal yet again).
In complex corrections markets make new high and break previous bottom yet it remains a correction. Here nifty dropped from 12150 levels to 12000 ( 170 points) then from 12K levels Nifty made a new dash towards 12240 levels and again dropped below 12K ( which was the previous low). Now interesting thing to note here is that Niftys new high at 12240 (last week) was ~90-100 points higher than previous high ( 12150) and when it dropped to 11900 then its low (11900 yesterday) was again 90-100 points lower than previous low (12000). So both the b & c leg of this correction seems to be perfectly synchronised or proportioned. Nifty action during last few days might seem chaotic but there is an order in chaos if once notices carefully.
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While we believe its a complex correction, there is also a chance that the entire move from 11600 is developing like a bearish extracting triangle ( which has 5 legs) and nifty is currently forming leg 5. We need a strong move above 12170-12200 to cance the probability of Nifty making extracting triangle.
So just to summarise, inspite of last 2 days maniac fall, Nifty still remains in upmove and the fact that it has closed above 12100 yet again, makes this a strong possibility. For further sign of confirmation, Nifty needs to move above 12175 & 12250 levels in next few trading sessions.On the downside the gap area between 12010-12050 is likely to offer strong support and if Nifty makes a close below 12K levels, then again the entire structure needs to be revisted.
Happy Trading!!
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