Nifty Analysis Tomorrow: Prediction, outlook and Nifty Trend for 21st Dec 2021

 

Medium Term Trend:👇 Down

Nifty @ 16614 - Blood Bath after Black Friday

In the last update, when Nifty was around 18K levels I had mentioned that.." fall towards 17500/600 (or even a bit lower towards 17K) is very much possible in the current wave".   Nifty tested 17K levels in Nov end and attempted a recovery and moved towards 17500 levels but could not sustain above it and in a matter of 4-5 days has fallen >1000 points towards 16500 levels.

I had also mentioned that I am not expecting any major sustainable fall below 17K levels (based on time cycle study) however today market has convincingly broken below 17K levels which might change things a little bit going forward. Having said this its just one day and it remains to be seen if Nifty manages to move back above 16800-17K levels. Chances are that price wise correction seems to have completed and what we are seeing is just an exaggerated move on the downside which could reverse in a similar fashion in coming trading sessions but one must not try to do bottom fishing and and from trading perspective it make sense to not indulge in long trades for time being ( when I say reverse I mean move back above 17K levels and not necessarily above 18500 levels)

Nifty Daily

In the daily chart above it can be seen that Nifty is following a 9-10 days cycle for each up and down leg. Entire downmove from 18500 level can be read as 5 legged ABCDE and we seem to be in E leg which is in 6th day of fall. Going by the current cycle its likely to continue for another 3-4 trading sessions and after that we might see some sort of recovery. 

Important thing is that since the fall has taken 5 legs , markets may not move back above 18K levels in a hurry and can instead go in for another sideways/corrective mode (preferably between 17K and 18K levels) which might last for another 8-10 weeks. If the fall was a 3 legged fall and markets had made the bottom in Nov end towards 16900 levels then we could have expected a new high soon but now things might get delayed. Overall view remains bullish but it remains to be seen if we see a lot more sideways trading between 17-18K levels for next couple of months.

Similar situations had played out in 2019 too ( see below chart) after a severe fall markets went into a long sideways consolidation. It remains to be seen if same scenario is repeated in 2021-22 as well. 

Nifty Daily (Sep19-Mar20)

There is a strong probability of one thing though, after next 3-4 trading sessions we may not see such exaggerated moves on the downside anymore and that could be the end of this downcycle. It may or may not move towards new highs but its not likely to break down further from current lows.

Happy Trading!!