Medium Term Trend: ↓Down (Changes to up above 9800)
Below 8900: Nifty opened higher but couldn't sustain above 9000 and gave up more than 130 points from days high to settle at 9880 levels. Up 60 odd points.
Now we have a second consevutive close below 8950 levels so looking at chart there is very little going on for the bulls now and everything is pointing in the favor of bears only. Having said this, let me rewind and take you to May 2018 ( 2 years back).
Left hand side is the chart for the period May 2018 (exactly 2 years before) and on the right hand side we have current chart. Now we couldn't help but notice stark similarities between both the charts. In 2018 Nifty had seen a sharp fall below 10500 and after that a pull back which was sort of 'rounding top' formation. During this period Nifty kept on sliding from higher level but continued to maintain a corrective trend and held on to the initial lows. Now currently we are seeing the same thing happening. Nifty continues to move in a zig-zag and in corrective pattern (similar to rounding top).
In 2018 when the correction got over, Nifty saw a steady move towards higher level (11k+). Now I am not saying that same thing is going on to happen now as well but it certainly is a possibility. 'History repeat itself' is one of the important parameters of technical analysis and should not be ignored. Even though there is nothing on charts yet, things can change quickly, bears are getting complacent and whenever any side become complacent, things change very fast in markets.
Now lets have a look at another chart.
Below 8900: Nifty opened higher but couldn't sustain above 9000 and gave up more than 130 points from days high to settle at 9880 levels. Up 60 odd points.
Now we have a second consevutive close below 8950 levels so looking at chart there is very little going on for the bulls now and everything is pointing in the favor of bears only. Having said this, let me rewind and take you to May 2018 ( 2 years back).
 |
| Nifty |
Left hand side is the chart for the period May 2018 (exactly 2 years before) and on the right hand side we have current chart. Now we couldn't help but notice stark similarities between both the charts. In 2018 Nifty had seen a sharp fall below 10500 and after that a pull back which was sort of 'rounding top' formation. During this period Nifty kept on sliding from higher level but continued to maintain a corrective trend and held on to the initial lows. Now currently we are seeing the same thing happening. Nifty continues to move in a zig-zag and in corrective pattern (similar to rounding top).
In 2018 when the correction got over, Nifty saw a steady move towards higher level (11k+). Now I am not saying that same thing is going on to happen now as well but it certainly is a possibility. 'History repeat itself' is one of the important parameters of technical analysis and should not be ignored. Even though there is nothing on charts yet, things can change quickly, bears are getting complacent and whenever any side become complacent, things change very fast in markets.
Now lets have a look at another chart.
 |
| Nifty |
Here, I have drawn a upward moving channel and Nifty is just trading on the lower side ( broke it slightly yesterday). I have also drawn 2 horizontal support lines (in blue) and 2 resistance lines (in red). Currently Nifty is just trading at or slightly below the first support line. Second support zone below this level comes at 8000-8200 levels hence its veryimportant for Nifty to move sharply up from here else we can go down deep in -ve territory. On the upside first clear resistance is around 9350 zone and above that 9700 levels. If Nifty start moving up and takes out 9350 levels, then chances are that it will take out 9700 levels as well.
So even though we don't have much positive on charts yet, the nature of fall or the nature of Nifty movement for last few weeks is indicating that markets are probably consolidating before it starts a new rally or bull move.Everytime a consolidation ends Markets usually sees a clear and sharp move on the upside. Hence once should be vigilant & careful if he is on short side as markets can reverse and trap shorts on the wrong side anytime.
Happy Trading
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