Medium Term Trend: ↓Down (Changes to up above 9800)
Nifty Soars, Fills the Gap: Nifty followed up yesterdays rally with another strong rally and almost closed at 9500 levels up 175 points.
Nifty sudden rise may have taken most by surprise but regular readers of our blog are well aware that we have been expecting this move for quite a while now. We had even pointed out the entire pattern is reminiscent of May 2018 (2 years back) when Nifty had shown similar pattern ( read here Post dt 20th May)
In last couple of months Nifty has shown a tendency of repeatedly falling down after touching 9300-9350 levels however even then we had maintained that eventually this level will be broken markets may take some time to do it but it will be taken out for sure.
Looking at the Nifty movement of last few days, there are strong indications that its broken for good now but we would like to see and observe markets for little more before confirming. Now lets take a step back and ref to our old posts where we had been mentioning about the significance of gap-down 'island reversal' area. Bearish Island reversal is a strong pattern and its appearance usually bring bad news for the bulls. Nifty had formed 2 back 2 back 'island reversals' and we mentioned that for any +ve scenario to unfold these gap down areas must be filled. Today Nifty has done a significant thing. it has filled the last gap down area. Now this should be read as a strong statement by markets and can bullish implications in coming days.
Filling this gap down area is the first step towards changing the medium term of markets which has been in 'down' mode since March. The next (major) resistance lies at 9750-9800 levels which is both , our critical turning point as well as the starting point of Island reversal area. If this gets filled then we can continue to see some strong bullish moves in times to come. However that doesn't mean that there wont be any pull backs. Of course pull backs will keep coming but those could be utilized to enter long positions. When Nifty was trading at 8000-8500 we continuously were saying that this is not the time to panic but time to build portfolio from long term & one should start buying quality stocks. Most stocks are up 10-20% from there. Reliance is up from 950 levels to 1500, Nestle is trading near new all time highs so is HLL and there are plenty such stocks.
Anyways, to summarise, Nifty has closed a key gap down area today which can have bullish implications in times to come. Next crucial resistance lies in 9500-9750 range ( big 250 points range). Pull backs are likely to come from time to time as markets are beginning to get overbought on short term charts. Hence some consolidation or sideways movement is likely and Nifty is expected to have strong support near 9200-9300 area and any fall which comes is likely to be restricted around these levels.
Nifty Soars, Fills the Gap: Nifty followed up yesterdays rally with another strong rally and almost closed at 9500 levels up 175 points.
Nifty sudden rise may have taken most by surprise but regular readers of our blog are well aware that we have been expecting this move for quite a while now. We had even pointed out the entire pattern is reminiscent of May 2018 (2 years back) when Nifty had shown similar pattern ( read here Post dt 20th May)
In last couple of months Nifty has shown a tendency of repeatedly falling down after touching 9300-9350 levels however even then we had maintained that eventually this level will be broken markets may take some time to do it but it will be taken out for sure.
Looking at the Nifty movement of last few days, there are strong indications that its broken for good now but we would like to see and observe markets for little more before confirming. Now lets take a step back and ref to our old posts where we had been mentioning about the significance of gap-down 'island reversal' area. Bearish Island reversal is a strong pattern and its appearance usually bring bad news for the bulls. Nifty had formed 2 back 2 back 'island reversals' and we mentioned that for any +ve scenario to unfold these gap down areas must be filled. Today Nifty has done a significant thing. it has filled the last gap down area. Now this should be read as a strong statement by markets and can bullish implications in coming days.
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| Nifty Hourly Chart |
Filling this gap down area is the first step towards changing the medium term of markets which has been in 'down' mode since March. The next (major) resistance lies at 9750-9800 levels which is both , our critical turning point as well as the starting point of Island reversal area. If this gets filled then we can continue to see some strong bullish moves in times to come. However that doesn't mean that there wont be any pull backs. Of course pull backs will keep coming but those could be utilized to enter long positions. When Nifty was trading at 8000-8500 we continuously were saying that this is not the time to panic but time to build portfolio from long term & one should start buying quality stocks. Most stocks are up 10-20% from there. Reliance is up from 950 levels to 1500, Nestle is trading near new all time highs so is HLL and there are plenty such stocks.
Anyways, to summarise, Nifty has closed a key gap down area today which can have bullish implications in times to come. Next crucial resistance lies in 9500-9750 range ( big 250 points range). Pull backs are likely to come from time to time as markets are beginning to get overbought on short term charts. Hence some consolidation or sideways movement is likely and Nifty is expected to have strong support near 9200-9300 area and any fall which comes is likely to be restricted around these levels.
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