Medium Term Trend: ↓Down (Changes to up above 9800)
Weakness Resurfaces: Yesterday Nifty had closed above 9300 but failed to close above 9330 levels. Today it again dropped below 9200 and closed with a loss of 160 points at 9150 levels.
Since last few days we had been mentioning that markets could head towards 9500-9700 in the short term and we saw quite a few attempts by markets towards 9300 level from lower level of 8600-8900.
Now looking at todays trading and how the charts are shaping up, there is a possibility that the upmove we were expecting towards 9500+ levels got truncated at yesterday high of 9340. Till now whenever Nifty was falling towards 8800-8900 levels we were always cautiously optimistic but this has changed significantly today. lets see what has changed on charts in just one trading session.
This is not the first time markets have retraced back form 9300 levels but till now whenever markets had fallen, they had fallen after hitting a 'higher high' on the daily chart. This time, however the fall has come from a 'lower high' which is a negative signal.
Secondly, it was important for Nifty to have weekly close above 9330 levels ( which was the previous week high). Last week Nifty had formed an shooting star/hanging man kind of pattern which has bearish implications if its highs are not crossed. Nifty failed to take out its high and in the process posted yet another shooting star on weekly chart. Emergence of back to back shooting star on weekly chart that too after a recent rally from the lows of 7500 could be a sign of fatigue and warrants caution at current levels.
And lastly, the entire move from 7500 to 9300 levels is beginning to look like a ascending triangle and the B-D line of this triangle got broken today ( which again is a bearish sign).
Market overall trend was always down ( needed a move above 9800 levels which is still very far away) but the things on the short term were offering some positivity (like higher lows) however now there is a possibility that even short term trend changes to bearish and market start correcting the entire rally of last 1800+ odd points (7500-9370). If that happens then we can fall towards 8500-8300 levels once more before markets can start moving up. Level around 8912 becomes extremely crucial now if that breaks, then markets will confirm lower high and lower low pattern. To negate this entire bearish view we need a strong move above 9340 levels which sustains for entire next week,
Till now we were suggesting to avoid shorts but now situation has changed slightly and its time be cautious if you are on the long side (try to book profit and keep a tight SL) . 8900 should be the final Sl for all long Positions (further 250 points to go from here). Below 8900 there is no point holding on to long positions. If one has a short position then it can be carried with a SL of around 9400 levels.
So in a nutshell, don't take todays fall lightly and become cautious. Markets inability to cross 9300 could push it back towards 8500-8300 levels and 8900 level becomes the key level now. Below 8900 levels, bears will extend their grip on the markets. For bulls to have any chance we need a fast and sustainable move above 9350 levels (which is now looking a bit difficult to achieve in near term).
Weakness Resurfaces: Yesterday Nifty had closed above 9300 but failed to close above 9330 levels. Today it again dropped below 9200 and closed with a loss of 160 points at 9150 levels.
Since last few days we had been mentioning that markets could head towards 9500-9700 in the short term and we saw quite a few attempts by markets towards 9300 level from lower level of 8600-8900.
Now looking at todays trading and how the charts are shaping up, there is a possibility that the upmove we were expecting towards 9500+ levels got truncated at yesterday high of 9340. Till now whenever Nifty was falling towards 8800-8900 levels we were always cautiously optimistic but this has changed significantly today. lets see what has changed on charts in just one trading session.
This is not the first time markets have retraced back form 9300 levels but till now whenever markets had fallen, they had fallen after hitting a 'higher high' on the daily chart. This time, however the fall has come from a 'lower high' which is a negative signal.
Secondly, it was important for Nifty to have weekly close above 9330 levels ( which was the previous week high). Last week Nifty had formed an shooting star/hanging man kind of pattern which has bearish implications if its highs are not crossed. Nifty failed to take out its high and in the process posted yet another shooting star on weekly chart. Emergence of back to back shooting star on weekly chart that too after a recent rally from the lows of 7500 could be a sign of fatigue and warrants caution at current levels.
And lastly, the entire move from 7500 to 9300 levels is beginning to look like a ascending triangle and the B-D line of this triangle got broken today ( which again is a bearish sign).
Market overall trend was always down ( needed a move above 9800 levels which is still very far away) but the things on the short term were offering some positivity (like higher lows) however now there is a possibility that even short term trend changes to bearish and market start correcting the entire rally of last 1800+ odd points (7500-9370). If that happens then we can fall towards 8500-8300 levels once more before markets can start moving up. Level around 8912 becomes extremely crucial now if that breaks, then markets will confirm lower high and lower low pattern. To negate this entire bearish view we need a strong move above 9340 levels which sustains for entire next week,
Till now we were suggesting to avoid shorts but now situation has changed slightly and its time be cautious if you are on the long side (try to book profit and keep a tight SL) . 8900 should be the final Sl for all long Positions (further 250 points to go from here). Below 8900 there is no point holding on to long positions. If one has a short position then it can be carried with a SL of around 9400 levels.
So in a nutshell, don't take todays fall lightly and become cautious. Markets inability to cross 9300 could push it back towards 8500-8300 levels and 8900 level becomes the key level now. Below 8900 levels, bears will extend their grip on the markets. For bulls to have any chance we need a fast and sustainable move above 9350 levels (which is now looking a bit difficult to achieve in near term).
Happy Trading
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