Medium Term Trend: ☝ UP (Changes to down below 15400)
Nifty @ 15683 - Sideways trade
Current week was a tad volatile, initially we saw a drop towards 15600 then Nifty rose and touched 15900 only to drop towards 15450 today & then recover sharply & close at 15700 levels.
Overall Inspite of the volatility Nifty has just closed flat but the movement we saw during last few days is very interesting and probably next couple of sessions will help decide if Nifty has made an intermediary top at 15900 levels or mkt will continue to rise & move beyond 16K+ levels. We had always maintained and mentioned in the last post that markets were overbought and negative divergences were also visible on the charts however there was no weakness on the price charts and charts were still looking good and strong. Now what this movement (last week) has done is that it has brought weakness to the price charts too. Bears got very close to turning tables on bulls but were prevented in the end (thanks to last hour pull back). Now moving forward we see two possibilities.
A) Bullish Scenario: Last 5-7 days movement has played out like an irregular corrective pattern, drop towards 15600 earlier in the week was A leg, then move to 15900-B leg and move towards 15450 today was C (last leg). Once C leg got completed, market opened a fresh leg on the upside and moved sharply towards 15700. If this assumption indeed is correct then market is likely to continue moving up and move beyond 16K levels soon. To confirm this scenario Nifty should sustain above 15730-750 levels on Monday ( just above todays high) & then move above 15800.
B) Bearish Scenario: This scenario assumes that market has hit a short term top around 15900 last week and a fresh corrective move has started from there. Fall we witnessed on Wednesday, Thursday & first half today supports this theory very much. Its just the sharp pullback we witnessed in second half which contradicts it. However it is important for Nifty to break below 15450 (Sensex 51500) soon. While Nifty bounced back exactly from 15450, Sensex hit a low of 51600. In short, if we see a drop towards 15450 again in next 1-2 trading session then its highly likely that this scenario is playing out hence trade accordingly. At the time of writing this post, DOW is trading 400 points down so anything is possible.
In Nutshell, if we see positive open on Monday and Nifty sustains above todays high then its likely that correction is already over as ABC irregular (secnario-1) and Nifty moving towards higher level and on the other hand if we see a gap-down open & strong fall below 15450, then scenario B is playing out (which is a bearish scenario) and could take Nifty below 15K levels.
Next week (initial 1-2 days specially) could be very crucial hence be alert and trade wisely, lot of points could be up for grabs, if, as a trader you keep patience and trade wisely.
Happy Trading!
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