Medium Term Trend: ↓Down (Changes to up above 12175)
Range Bound Trade: Nifty opened around 12050 levels todays however dropped below 12100 subsequently and closed at just below 12100 down 30 odd points.
Yesterday we had mentioned that though Nifty has closed above 12100 levels ( which was our reversal level), we would like to see one more close above 12100 to seek a confirmation of its decisive break. Today Nifty failed to close above 12100 hence the near term trend remains down for now. Now looking at charts we have further revised the reversal level to 12175 ( just a tad above todays high).
Yesterday we had mentioned a possibility of Nifty forming a bearish 'evening star' pattern however Nifty needed a strong fall below 12K levels to confirm the pattern (which didnt happen) so we need to see if Nifty can protect 11980-12K levels on Monday as well. Looking at todays candle stick pattern, Nifty has formed a 'bearish belt hold' pattern. In such patterns the opening price becomes the day high and market is not able to cross it in entire days trading. Needless to say that this is again a bearish pattern (provided we see a followup selling below the low point of the day).
Now even though markets have failed to cross above 12100 the fall we have seen from 12150 is not inspiring much confidence for bears. It looks like markets are trying to consolidate for a next move on the upside, however it will be too early to comment and we need to see how market trades in next 2-3 trading sessions. In case market trades lack lustre and manages to protect itself from a deep cut then probably the bottom is done at 11630 levels But in case we do see some sharp cuts in next 2-3 sessions then there is chance that we could be testing the recent lows again.
Another thing which goes in markets favour is that its pretty light at the moment. The OI in Nifty futures is not very huge so that will definitely protect markets from falling big but again that doesnt means that we cannot fall 700-800 points from here.
In summary, markets are finding resistance in 12100-12150 zone and we see another move above these levels then probably the trend will change to 'up' again however if we do see a sharp move on the downside ( which remains a possibility till now) then the chances of retesting recent lows ( or even lower) will become strong again.
Happy Trading!!
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