Nifty Tomorrow: Prediction, outlook and Trend for 26th July 2021

Medium Term Trend: ☝ UP (Changes to down below 15400)

 Nifty @ 15920 - Breakout is likely round the corner.

In previous post we had mentioned that the way Nifty has crawled above 15900 levels ( intraday and not with a strong thrust or gapup), there is a chance that this breakout proves to be a false one and Nifty once again drops in the sideways range. Thats exactly how its played out and next three days Nifty was back at 15600 levels. However in one of the older post ( for 13th July) we had also mentioned that-

"From a bullish standpoint, that will be an ideal scenario. Market goes down below 15650, traps bears and then make a sharp move back towards 15800-15900"

 From what we have seen during last couple of trading sessions, I wonder if the above scenario is beginning to unfold now. In a way what we were expecting then is probably happening now. For a bullish move to begin its important that weak long hands are thrown out and probably thats what market achieved when it made a sharp dip below 15600 levels on Tuesday and equally sharp recovery is also indicating that now market has made up its mind to move beyond 15900. We had also posted one Nifty intraday chart few days back suggesting that correction probably got over as 5 legged ABCDE triangle however that too warrants a change now since its proven that breakout was a false breakout. Below is the updated count. 

Nifty Daily

As per updated count the correction is folding as a complex corrective ABC-X-ABC (where in first corrective pattern was regular zigzag and second was irregular). Now the thing about complex corrective is that they can develop as triple three correctives as well .Chances of a triple three are less though but in case even now Nifty fails to move decisively above 15900 then that could mean ABC-X-ABC-X-ABC is undergoing which means markets could continue to trade sideways for atleast 2 more weeks. But like I said earlier, chances are less and its likely that we are very near to a decisive breakout. The fact that weekly closing has come below15900 is infact a good sign for bulls. From a bullish standpoint it will be great if this level gets broken with a sharp thrust/gapup next week.

In Nutshell, it appears as if Nifty is close to giving a decisive breakout above 15900 in next week and watch out for a strong trading session early next week. Having said this, if we see continue to see lackluster move next week too then its likely that 3rd leg of corrective start developing and we spend 2 more weeks in this range but this is our least preferred scenario for now and we expect markets to make a decisive move on the upside soon and we advise traders to hold on to their long positions (with proper SL ofcourse).

Happy Trading!

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