Medium Term Trend: ☝ UP (Changes to down below 15100)
Nifty @ 15800 - Inching up slowlyIn the last post we had discussed
"In Nutshell, market are in slightly overbought territory ( as its moving in one line since past many days) but markets can stay in overbought territory for long hence its not a reason to go short but continue to maintain long position with tight stop losses. Markets are strong and in bullish zone now and there is no reason why it cant move beyond 16K in this upmove"
In the last week market has moved further up towards 15800. Its definitely facing resistance around 15800 however no major weakness or selling pressure is seen till now. On Wednesday markets dropped towards 15600 which raised the questions if markets are starting a correction for short-term. However yesterdays and todays pullback is indicating against that. This upmove we are seeing is likely to last for few more days and we can see one more leg on the upside before market gives any sort of correction.
Overall market continues to be overbought and we are also seeing negative divergences on hourly chart however on price chart there is no weakness still and momentum is still strong and likely to continue. There is no reason why markets cannot rally further 400-500 points before correcting a bit. VIX is continuously falling and is now below 15 ( which is the lowest level for current year). Low VIX is also indicating that we might see some more buying interest and hence more upside from here only thing is upmove could be gradual and slow.
Since markets are overbought, the things can change anytime hence no sign of weakness should be ignored. Any weakness persisting beyond 3-4 days could result in short term reversal. Having said this the trading should still be done on the long side only with strict stop losses ( like we discussed in previous post as well).
As far as levels are concerned for short term levels around 15650-625 should offer good support and below that 15500 is the major support area below which market could drop towards 15100 which is the final support level of this upmove. And like we mentioned in previous post, keep a tight SL, exit when market exhibits sign of weakness and enter long again when strength remerges.
Happy Trading!
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