Nifty Analysis: Outlook and Trend for 7th Apr 2020

Medium Term Trend: ↓Down (Changes to up above 9900)

Below 8100: Nifty opened with a small gap and traded in a small range between 8200-8100 for most part of the day on Friday and closed just below 8100 levels down 170 points.

Nifty has dropped to 8100 levels which is the breakout area of the falling wedge failing to hold this level and further weakness below 8050 levels could push nifty back to 7700-7800 levels. However whenever market has dropped below 8500 it has always managed a comeback in next few sessions. Regular reader of the post are aware that on monthly charts, at levels around 8400-8500 Nifty is more or less done with corrections which is in line with previous major falls seen earlier ( in 2008-1999 & 1992).

In March even though we fell below 8000 and all the way down to 7500, the monthly close came above 8500 levels which furthers strengthens our view. However we had also mentioned that we should not be seeing too much weakness below 8500 and not for too long. For this month its very important for nifty to make a close above 8500 levels agian and then in subsequent months these levels around 8k should not be tested again.

Long term support line ( which only got tested once in last 20 years) was broken temporarily in March however the monthly closing was above it. So even though it had raised few doubts, for now it holds.

Sensex

Also, the rise from 7500 to 9100 levels is apprearing impulsive on the daily charts whereas the fall form 9100 to 8000 levels ( last few days) is appearing tired and slow. Move on the downside has to be sharp and quick, whever we see slow falls, the chances are its just a correction and market will start moving up again once its done.

In summary, keep an eye on 8050-8100, if we see sustained selling below this level then mkt can go down to 7700-7800 levels once more and if even these levels are broken then we could be looking a very long and painful correction ( not so much price wise but time wise). On the other hand a move above 8300-8350 levels can push Nifty back towards 9000 levels if that is taken out  (faster retracement of E leg of Extracting triangle as mentioned in the previous posts) then we are going straight towards 10K levels.

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