Nifty Tomorrow: Prediction, outlook and Trend for 26th Nov 2020

Medium Term Trend:  ☝UP (Changes to Down below 12500)

Bearish Engulfing :  Nifty opened strong above 13100 but quickly dropped to 13000 levels driven by profit booking and kept on losing ground as trading progressed to close at 12850 with a loss of around 200 points.

Todays fall is significant on many accounts for it has come just before expiry day and has indicated that Bears have not thrown the towel yet. They have prevented a consecutive close above 13K and also managed to post a 'bearish engulfing pattern' on daily charts ( which can be an indication of a bull trap). Lets see the chart below.

Nifty Daily

In the last few months we have seen 2 bearish engulfing candles. 

• First was seen on Aug end and after that market went into correction mode for 3-4 weeks
  
• Second Engulfing pattern was seen in Sep after which we again saw a correction of 10 days
  

Now we have seen a similar bearish engulfing candle today again hence its entirely possible that we go into a correction mode which last for 2-3 weeks (or more). Mind you its just a possibility and not a given. Its too early to conclude basis just one day trading/fall and we need to see follow up trading to form an informed opinion. Having said this, these are early indications which must not be ignored.

Till yesterday we were bullish but today as soon as levels around 12900 broke, we turned Neutral. We are still not bearish (not yet). Bears need to do a lot more to turn the tables and reverse the trend (but for now view is changed hence this update). 

Yesterday we had mentioned that 13K levels had seen an accumulation of 30 lakh shares in OI hence its unlikely that market will go below 13K but as it turned out our conclusion was totally wrong and the entire addition in OI was liquidated today. Its likely that overconfident bullish traders had written puts around 13k levels and were forced to coverup today which increased selling pressure and further accentuated the fall in Nifty.

Talking about the next short term support, it exists around 12750 ( previous swing low) and in case market break below it in next 2-3 trading sessions then we can see more selling and fall towards 12500-600 levels.

Hence for short term perspective 12750 becomes a very critical support and if Bears manage to break it then they are likely to be back in the game. Final support exists around 12550-12500 below which the overall trend will turn to "down' or "bearish".

Happy Trading

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