Nifty Technical Analysis: Outlook and Trend for 07th Oct 2020

Medium Term Trend:  ☝UP (Changes to Down below 11100)

Nifty Getting Stronger:  Nifty has been rising non stop and exhibiting remarkable strength. In last 7 trading sessions it has moved from 10800 to almost 11700 levels. ~900 points in 7 days with an average of 100+ points each day.

In last post we had mentioned that 11500 is the final hurdle for Bulls and if crossed will put markets firmly in the bullish trajectory. We had also advised traders ( who were on short side to keep 11500 as final SL for their short positions). Markets did close above 11500 yesterdays (which has also prompted us to change our medium term indicator back to 'Up' now) and now almost touched 11700 today.

Moving forward, we believe, now Markets are in a very positive and bullish zone. We had been saying that 11600 will eventually be taken out by markets & the way it has been taken out has surprised most but we were always expecting it. However now that we have closed above 11600 what next? lets see

Though bulls are appearing in hurry and market is rising non stop there is slight tiredness or loss of momentum appearing on the charts. Markets have been rising non stop for last 7 days and max we have seen markets going up is 9-10 days. Also we had posted a tweet yesterday stating how markets have posted 3 back to back 'gap up zones' and if we see another one in next 1-2 trading sessions then it might turn into 'exhaustion gap' ( i.e, a gap area which gets filled on later on). Today market opened with a gap but filled the gap area intraday however in the end it again moved up and closed above it. Going forward for next 2-3 sessions we need to see if markets manages to trade above this zone ( around 11550-575). Moving below this zone could indicate that markets wants to take a breather now ( surely it cant keep on running like this forever).

However that doesn't mean that one should create short positions below that, absolutely not. It will just be an indication to book profits, that's all. Now markets can take 'breather'  or 'halt' in many different ways. It may just get stuck around at same level (for ex 11500 or 11600) & not move at all for 1-2 week or it may give a sharp fall towards 11400 once again or it may turn choppy and volatile and start swinging wildly in a tight range (say between 11500-11700). This is just how market rests or takes a breather before it decides to move up again.

For any serious correction to develop Nifty needs to break below 11350 levels in next 3-4 trading sessions ( which is looking very unlikely for now) and till that happens, market remains in uptrend from both medium and short term perspective so keep that in mind before making your trading decisions( As far as our trading position is concerned, we had initiated long at 11370 levels last week).

Happy Trading

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