Medium Term Trend: ↑UP (Changes to down below 9725)
Rangebound: Nifty was volatile but strictly traded in a tight range between 10200-10400 in last couple of trading sessions.
In the last post we had mentioned "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"
Nifty did test 10200 levels on Thursday (twice) and even though it didn't sustain below it, breaking of 10225 levels intraday has raised some more doubts about Nifty's ability to sustain high levels. Market is looking kind of tired so a corrective/sideways move from here is possible. To negate this, nifty must hold 10225 levels and make a strong bounce above 10550 levels. 10225 is a critical level for short term and shouldn't be tested again and again ( its already tested once and broken intraday last week).
On weekly chart, Nifty has made a 'doji' or 'spinning top' kind of pattern which has come after a strong bullish candle in previous week. Now if we have a strong bearish candle next week then entire pattern could turn into 'evening star'. Evening star is bearish pattern and indicative of top formation. Appearance of 'Evening star' on weekly chart is not very common and could have bearish implications in times to come. However to conclude anything we must see how Nifty trades (and more importantly) and wnere it closes next week.
There are couple of other indicators which are indicating a possible 'pause' here like 200 DEMA - Nifty 200 DEMA is sitting at 10550 levels and Nifty (so far) has failed to cross above it. Also on daily charts if one look at candle of last Wednesday then one will see 'bearish engulfing' candle. Which again is a bearish pattern (and so far nifty has failed to break above it).
Overall ( as we have posted in previous posts ) the entire rise from 7500 to 10500 is looking like one ascending wedge which seems be in (or already completed) its last leg 'E'. Strong move below 10200 levels could be a strong indication that its indeed a wedge. However having said this, the overall sentiment and participation in the market remains positive and bullish ( all gapdowns/falls are currently being bought into) but we all know that can change in a minute hence one needs to be careful.
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