Medium Term Trend: ☝UP (Changes to Down below 12950)
Nifty volatile @ 13500 : Nifty bounced back from 13400 levels to post a new high above 13550 levels but only to see a sharp fall again towards 13400. It made smart recovery yet again and managed to move back above 13500 levels towards close of play.
In the last few posts we have been mentioning that Nifty's overall trend remains on the upside hence trading wise it will be best to stick to long position only and that it will be foolish trying to predict the 'top area' as markets can go for extended runs in such circumstances. Well market trend still remains up however we are just beginning to see some cracks in the current rally. These could be early warning signs yet at the same time its also possible that Nifty negates this and start moving strong again during next week.
Yesterday we did see a 'hammer' candle formation which had raised some doubts. But once market opened strong indicated that no damage was done but today once market opened strong above 13500 we would have liked to see market remain strong only but that didn't happen and markets once again dropped to 13400 levels and posted a 'Doji' candle which indicates indecisiveness. It could mean that bulls are beginning to get apprehensive and may go for profit booking (especially if Nifty fails to break above 13600)
Nifty has shown that it has good support at 13400 levels so for immediate term perspective 13400 becomes a very crucial support now, further testing of 13400 is likely to result in its breach and Nifty could go in correction. However for medium term perspective 13175 is key support area which could get tested if 13400 is broken. Below 13175, 12950 is final level below which the trend will change to down. Also the movement for last few trading session is looking like contracting triangle (ref chart above) which carries bearish implications, so one needs to keep a close watch over it.
In case Nifty makes a sharp move back above 13600 then it will reaffirm the bullish trend and the cracks and doubts we talked about, will mostly be taken care of.
Happy Trading
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