Nifty Tomorrow: Prediction, outlook and Trend for 21st Dec 2020

Medium Term Trend:  ☝UP (Changes to Down below 13200)

Nifty Almost @ 13800: Time to be 'optimistically Cautious' 

In the previous post we had mentioned that "A successful cross above 13600-620 levels in next few trading sessions is likely to put Nifty back on bullish track towards 13800-14K levels" 

The very next day Nifty moved above 13600 ( opened around 13650) and has now moved almost towards 13800. Now that we have reached 13800 its possible that markets further move towards 14K levels however now the time has come to become cautious about this upmove and not carry long positions blindly. Now lets understand why.

RSI on Nifty daily charts has closed above 80 today, last time it had closed above was way back in Jan 2018 ( in between it had kissed 80 couple of times , once in 2018 itself and once in 2019) and each time it happened, we did see some amount of correction in Nifty ( pls ref to the chart below)

Nifty Daily

Now we are not saying that market will start falling from Monday ( it might or might not) but this definitely calls for some caution. Trading still needs to be done on long side only as there is no reversal on the price charts yet however it would be better if target for profit booking is kept small (70-100 points) for time being and any weakness emerging on the price chart should not be ignored. Its not the time to be overconfident and but to be cautious and one should be on the look out for danger signs that might begin to appear.

Another reason is that Nifty is making way too many hammer patterns on daily charts. Last week we had 2 and this week again we have 2. These repeated formation of hammer patterns though looks bullish but could be an advance sign of market nearing top area. These creates an impression in the mind of traders that all intraday dips are being bought into thus lowering their guard.

In 2018 and 2019 we had seen a correction which lasted for 1000-2000 points but those were pretty slow hence it would be pretty interesting to see what kind of correction (if we do get any) we see this time around.

Just to reiterate we are not going bearish, but just being cautious. Will go bearish when we see weakness on charts and not before that. For now its very much possible that we continue to see upmove for few more days/weeks as no one can tell and predict the time for a reversal but we can ensure that we are prepared for one when it comes and not let markets catch us offguard. For now support exists at 13700 and below that 13425-450 levels and final support @ 13200 levels.

Happy Trading

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