Medium Term Trend: ↓Down (Changes to up above 9800)
Nifty Plunges: Nifty opened with a gap down and broke below 9200 levels to close at 9150 levels with a massive loss of almost 250 points.
Nifty once again opened with a gap down and it assumes lot of significance since yesterday opening was with gapup. With todays gapdown Nifty has posted yet another bearish "island reversal" pattern on the charts. The last Island pattern (9850-9500) which formed on 1st May still stands and today markets have formed yet another bearish Island pattern. It can have serious implications if its not filled in next few trading sessions. So it will be interesting to see how markets behaves from here. its possible that we see markets taking big enough swing from here.
In Last post we had mentioned that markets are proabbly looking good for another upmove. Markets did move from 9200 to 9550 levels but it hapenned in a gapup move (on the back of economic package announced). Even though markets gave up some of the gains it had closed in +ve territory yesterday and gapup stayed intact so a further push towards 9800 levels was a real possibility. However it seems too much of positive sentiments or expectations on the street gave smart money an incentive to offload some of the holding and do some profit booking/selling.
Formation of another bearish island reversal pattern today is a matter of great worry for the bulls and its important for them to defend 8950-9000 levels. Currently this level is standing there as a strong support and must not be breached. Breaching 9k will further give strength to the bearish structure that is being formed.
In Nutshell , we need bulls to defend 8950-9000 levels and then fill the gap which formed today at 9275-9350 levels. If that happens we can hope for a fresh run towards 9500-9800 levels ( like we have been mentioning in previous posts we expect 9300-9400 resistance to break ultimately). It is possible that fall today is just a move by markets to shake-off weak/small traders who entered markets yesterday just because of positive newsflow. But we will have to wait for few more trading sessions to confirm that. If the gap at 9250-9350 gets filled then we can expect the markets to fill the second gap (9550-9850) as well but before that its really important to protect 8950-9000 levels.
Happy Trading
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