Medium Term Trend: ↑UP (Changes to down below 9725)
Nifty Tumbles: After a flurry of gains in last few sessions, Nifty finally moved down and closed around 10300 levels, with a loss of around 165 points.
In previous post we had mentioned:
"Nifty is now nearing its intermediate target which is around 10500-550 levels so we can see some halt/pause at these levels"
"Current rally is mostly driven by short covering and now that we have moved conclusively above 10350 levels the short covering more or less seems to be done with. Going forward further upside will depend on how much actual/followup buying"
Both these factors played out and after acheiving its current target which was sitting around 10550 levels, nifty saw some profit booking. Also with most of the short covering already out of the way , markets failed to find any support and drifted down.
Now moving forward its possible that its just a temp pause and Nifty will again resume its journey upwards on the other hand chances of further weakness from current levels have also increased. Lows around 10225-10250 are important during next 1-2 trading sessions and if Nifty break below it then it can once again drop towards 10K or lower levels.
Nifty had some minor support at 10325-10350 levels which was breached intraday today and even day close has come below it which tilts the bias in favour of bear slightly more. To negate this bias Nifty must make a smart recovery back above 10450-500 levels very fast.
In summary, there was a possibility of some fall from 10500 levels which has materialized now and future moves will depend on what Nifty does in coming sessions. Holding on to 10225 levels could push Nifty back towards 10500 however break of 10225 could increase the downward momentum and push Nifty all the way to 10K levels once again. For medium term 9725 is the key area and if its breached then we are looking at some major correction (entire rally from 7500-10500 could get corrected). From trading perspective long positions that we had were all squared off today.
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