Medium Term Trend: ↓Down (Changes to up above 9900)
Back above 8000: Nifty opened flat and quickly turned negative. However buying around 7800 levels helped push Nifty back above 8k levels. It made a high of 8375 and closed at 8320 levels, up by 520 points.
Monday's mega fall ( from 8700 to 7600 levels) had raised doubt if markets were preparing themselves for a long-haul in Bear territory. Market had already finished most of the correction (price wise and on many others parameters which we have already shared in previous posts) around 8400 levels last week and another 10%+ fall on Monday did raise serious question marks. However since we are analysing monthly charts we need to see how and where Nifty finishes the current month. Todays sharp recoery is a positive news for the bulls.
If in next few sessions markets can move above and 8500-9000 levels then probably we can say that correction is over and markets are ready to move up but in case markets gets dragged down to 7500 levels once again and we start spending more time there then it could mean a lot more of pain is still pending.
Price wise correction is mostly done by markets and now the only question is when do we start recovering. Answer is if we see a fast recovering from here quickly then we can see a new trend starting on the upside very soon but if we fail to move above 8500-9000 levels and markets keep dropping below 8k levels then the chances are that we spend atleast 8-10 months in a tight range ( time wise correction). In time wise correction we may not see much fall in prices but it will be test of patience of investors and traders both.
From trading perspective. Nifty seems to have broken a falling wedge/contracting triangle (once it moved above 8100 levels) which is a strong bullish sign and could push Nifty back above 9000-9500 levels in a sharp move. More about triangle pattern can be read at:
http://niftywaveindia.blogspot.com/2018/12/technical-learning-contracting-and.html
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| Nifty Hourly chart |
In a nutshell, move back above 8300 levels is a welcome and positive sign and if Nifty is able to recover and move above 8500-8800-9000 levels in next couple of trading sessions then probably we can expect start of fresh leg on the upside pretty soon. However a drop below 8K levels back to 7500 will tilt the favour of markets going deep in correction mode (time wise). From trading perspective, it seems that markets have broken out of a falling contracting triangle so sharp movement on the upside can be expected in coming sessions. Try to avoid going short and buy on dips. Buying around 8100-8200 levels (if it goes there) with a Sl of around 7900 could be a sound strategy.
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