Medium Term Trend: ↑UP (Changes to down below 10900)
Nifty Cracks: Nifty opened around 11300 levels and traded in familiar range of 11300-11350 in the first half but in the second half it cracked and dropped towards 11120 levels ( almost 230 point fall form day high). It recovered marginally to close at 11180 levels, down 120 points.
Day before yesterday, we had shared a tweet about market posting 2 back to back "inverted hammer/shooting star" candles on the daily charts and then following it up with a 'hammer' pattern. This indicated a big movement (either side) in Nifty is likely to come in next few sessions. Today we did see a huge swing which has more or less confirmed that the current up leg (for short term perspective) which started from 10900 levels is over now and Nifty has again gone in corrective mode.
Nifty had been trading listlessly in a range from 11250-11350 for last few days and we needed a strong thrust above 11380 levels in order to bring a fresh wave of energy in Nifty which didn't happen and Nifty has broken below 11240-11250 which is now indicating the start of another correction in markets.
Now since last few months all the corrections we have seen in the markets have been shallow (price wise) and no major damage was seen on the price chart. If this is a shallow correction too then it should hold around 10900-10950 i.e, after another 100-150 point fall mkt should find its bottom. Nifty since last 3-4 months is continuously creating higher highs and higher bottom. Going by this logic Nifty shouldn't fall below 10885 levels ( which was the last swing low). If it does that then it would mark the change of medium term from 'up' to 'down'.
To sum up, after seeing todays fall it looks like that Nifty has gone into correction mode once again. How far and how deep this correction will last that is something we will have to see. If its a normal correction then it should end above 11885 levels ( preferably above 10950 levels) if it doesn't then it could be an indication of a deeper correction and Nifty could fall even further. On the upside we need a move above 11380 levels to end this correction and start a new leg on the upside.
Happy Trading!
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