Nifty Technical Analysis: Outlook and Trend for 31st Aug 2020

Medium Term Trend:  ↑UP (Changes to down below 11250)

Testing Crucial Levels: Nifty continues to move up and now testing 11650 level which is extremely crucial for long term perspective.

Yesterday we shared a tweet and had mentioned the significance of 11650 levels. Infact entire zone from 11300-11650 is one big crucial zone for the markets. In Feb/March when meltdown happened, it actually began from this range. Now there are many traders which are seeing this move from 7500 to 11600 levels as a mere pullback and a corrective move. However if its just a pullback then it should not move much beyond 11650 levels if any sizeable correction is to happen, should happen from here only. Further strength from here is likely to shut door for any major correction in medium term.

The way markets have been moving in last 2-3 months is indicating that its in midst of a strong bullrun. All the correction we have seen recently are shallow and not lasting for long. This again is indicating that market is in no mood to give lower levels so that people can enter & buy.

As far as our analysis is concerned, we had repeatedly said way back in March (when everyone was extremely bearish) that levels around 8000-8500 are rock bottom level from long term perspective and its time to build a good quality portfolio. Most stocks are up by 50-100% from there in last 5 months offering stellar returns.

As a trader we have to see market the way it actually is and not the way we want to see it. There are many traders who are still shorting Nifty because they are convinced that markets will return to sub 8K levels. But that's not how we see markets. Nifty is clearly telling that its in a bull run so why assume differently? first there has to be a price confirmation on the chart then we should form an opinion. But the way most traders trade is they form the opinion first, take a trading position and then expect markets to behave in line with their expectation. If you do this then 90% of the time you will lose.

You as a trader has to trade the way Nifty is telling you, don't expect markets to move as per your expectation. This has never worked in past and will never work in future as well. Keep emotions aside and follow charts is the basic principal we follow. No doubt markets can fall from here, if it does then we will change our view/trading strategy accordingly. This shouldnt be an ego issue. Either we can satisfy our ego or we can make money ( both cant happen).

If you look at the history of our recent trades you would see that most trades undertaken by us have been on the long side and most have been successful since market is bullish. Markets rewards those who follow it and absolutely destroy those who goes against it.

Now coming back to Nifty levels, 11500-25 is the critical level to watch out for from very short term perspective. If it breaks one should become alert and avoid taking fresh long positions, below this level next level to watch out for is 11375-400. If 11375-400 also breaks then one should turn extremely cautious and exit all long position once and final level is 11250. If broken can attract fresh short positions/selling. On the upside if Nifty successfully manages 2-3 close above 11650 levels ( preferably weekly close next week) then sky is the limit and markets can touch any levels hence makes sense for one to keep riding his long position.

Happy Trading!

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