Medium Term Trend: ↓Down (Changes to up above 9900)
Below 8300: Nifty opened weak and kept drifting lower. It kept moving on moving south in a steady move and touched 8200 levels intraday & closed at 8250, down 350 odd points.
In last post we had mentioned that Nifty can drop to 8150-8200 levels ( which is the breakout area of falling wedge) and below which it can further fall to 7800 levels but going below 7800 could mean Nifty is preparing itself for an extended stay at lower levels.
Broadly speaking, 8500 is the level, where nifty has completed a major correction (which is in line with all major corrections seen in Indian markets). whenever Nifty has fallen below 8500 levels, it has managed to bounced back. Last 2 weekly close have been above 8500 and even the monthly close yesterday came above it. Vix is falling daily but still above 60 which is very high for normalcy to return to markets, it should fall below 25-30 levels, till then market is likely to continue moving sharply in either direction.
Last post we had also mentioned about the possibility of a bullish extracting triangle, that option is still on and will be negated once E leg becomes larger than C leg ( i.e, below 7750-7800 levels.).
Hence we should continue to observe markets and if Nifty takes support in 7800-8200 range ( big range) and move back sharply above 8500 levels then there is a possibility of markets starting a new trend on the upside. If we continue to witness weakness below 8200 and 7800 levels then the pattern will be negated and will be strong sign then markes are preparing itself for an extended correction and likely to be range bound/weak for quite some time ( 10-12 months from here).
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