Medium Term Trend: 👇Down (Changes to up above 15150)
Nifty @ 14938 Down 140 points : Weekly Close below 15k
Nifty opened weak today (in line with weak global cues) however while most global indices recovered during the day, Nifty did opposite and got weaker and weaker and even broke below 14900 levels intraday. It recovered slightly towards to close at 14940 levels.
In the last post we had mentioned that Nifty has formed a "bearish island" reversal pattern which carries bearish implications. We had further mentioned that
"Now its possible that markets have already achieved their immediate target on the downside ( around 14500 on Friday) or at the same time its possible that Fridays lows are retested again and markets even break it and fall towards 14200.
Only silver lining is that even though 14600 was broken convincingly on Friday, todays closing has come above it and thus market has prevented consecutive close below 14600 (which was a crucial support). If markets can hold 14600 for few more trading session and manage to move above 14900 levels then there is chance that this correction is probably ending"
Nifty saw a reversal on the very next day and it not only protected 14600 levels but filled "bearish island reversal" gap down area as well ( which was sitting at 15000-15100 levels) which was a significant resistance.
Now that Nifty has crossed above 15100 levels (thus negating the island reversal pattern) we have to think about the possibility of latter scenario (positive) unfolding which means its highly likely that Nifty is ready to open a fresh leg on the upside. Nifty even managed to close above 15200 on Wednesday but in next two sessions has now given up around 300-350 points. Inspite of that as long as 14800-850 is not broken convincingly there is a chance that 15200 will be conquered eventually and market will make a move towards fresh high pretty soon. Looking at the charts, yesterdays and todays move is looking like a corrective move which shouldn't take Nifty much below 14800-850 levels. However in case we see continued weakness below 14800 levels then probably we will have to reanalyze things. For now we are keeping the medium term to down ( will change it to up above 15150 levels).
So in summary- even though Nifty is facing resistance at 15k+ levels and we are seeing big falls every now and then, there are chances that this correction is probably in its last leg. It remains to be seen if it finishes around 14800-850 ( todays low ideally) and Nifty start another upmove towards fresh highs. A move below 14800 would mean our assumptions is not right and the correction might still take some more time to finish. Holding todays low and moving above 15150 levels would be a strong indication that a fresh upmove has started on the upside. Trade accordingly.
Happy Trading
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