Medium Term Trend: ↓Down (Changes to up above 11095)
Halt in Carnage: After falling for more than 800 points in last 2 days, Nifty took a breather and prevented further damage. Though at one stage it was threatening to go down once again but it managed to move back in green to close flat near 10450.
Though Nifty failed to put up a sizeable rally today but many must be taking comfort from the fact that it didnt fall any further. Global markets were cautiously positive and did manage to cut some of the losses of last couple of days (but not nifty).
Corrections can broadly be divided under 3 Categories:
1. Which is common and seen frequently ( 1-3 times a year).
2- Not so frequent and cause massive damage (once in 3-5 years)
3-and major ones which totally destroys market but seen only once in 10-15 years ( like 2008/1999)
Once nifty broke below 11K levels, it turned into something more than a normal correction. Weekly RSI is sitting at 30 which is extremely low and like we mentioned in previous post, this level is seen only twice in last 12 years (2012 & 2016). In case market decides to end this correction as type 2 then there is a possibility that the worst is over ( though some more weakness cannot be ruled out and its possible that weekly RSI can remain stable or even go up while market go down some more but that could be a sign of strength and not weakness).
Continuous weakness from here could be indicative of something major and exceptional, in such a scenario we can fall all the way down to 9k-9500 levels ( that would push RSI to 20 like we saw in 2008).
For now we need to observe if market is trying to finish the correction around these levels and to do that it must fill the last gap down ( 4th consecutive gap) which is sitting at 10700-10850 in next few trading session. Trading below this gapzone could give more power and further encouragement to bears and could cause more weakness. Closing above this gap could be the first sign that bulls are returning. In most market conditions 4th consecutive gap usually gets filled up in subsequent trading sessions ( but what we are witnessing nowadays is not normal hence the word of caution).
In Nutshell, the overall trend continues to be down and need to see if Nifty tries to fill (and make a close above) the gap area at 10700-10850 levels, if it does then some strength can be expected back in the market , failure to fill this gap and continuous trade below this zone would be negative and could push markets down again back to 10200.
Happy Trading!
Halt in Carnage: After falling for more than 800 points in last 2 days, Nifty took a breather and prevented further damage. Though at one stage it was threatening to go down once again but it managed to move back in green to close flat near 10450.
Though Nifty failed to put up a sizeable rally today but many must be taking comfort from the fact that it didnt fall any further. Global markets were cautiously positive and did manage to cut some of the losses of last couple of days (but not nifty).
Corrections can broadly be divided under 3 Categories:
1. Which is common and seen frequently ( 1-3 times a year).
2- Not so frequent and cause massive damage (once in 3-5 years)
3-and major ones which totally destroys market but seen only once in 10-15 years ( like 2008/1999)
Once nifty broke below 11K levels, it turned into something more than a normal correction. Weekly RSI is sitting at 30 which is extremely low and like we mentioned in previous post, this level is seen only twice in last 12 years (2012 & 2016). In case market decides to end this correction as type 2 then there is a possibility that the worst is over ( though some more weakness cannot be ruled out and its possible that weekly RSI can remain stable or even go up while market go down some more but that could be a sign of strength and not weakness).
Continuous weakness from here could be indicative of something major and exceptional, in such a scenario we can fall all the way down to 9k-9500 levels ( that would push RSI to 20 like we saw in 2008).
For now we need to observe if market is trying to finish the correction around these levels and to do that it must fill the last gap down ( 4th consecutive gap) which is sitting at 10700-10850 in next few trading session. Trading below this gapzone could give more power and further encouragement to bears and could cause more weakness. Closing above this gap could be the first sign that bulls are returning. In most market conditions 4th consecutive gap usually gets filled up in subsequent trading sessions ( but what we are witnessing nowadays is not normal hence the word of caution).
In Nutshell, the overall trend continues to be down and need to see if Nifty tries to fill (and make a close above) the gap area at 10700-10850 levels, if it does then some strength can be expected back in the market , failure to fill this gap and continuous trade below this zone would be negative and could push markets down again back to 10200.
Happy Trading!
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