Nifty Tomorrow: Prediction, outlook and Nifty Trend for 31st Jan 2022

 Medium Term Trend:👇(Down)

Nifty @ 17100- Closed flat

Nifty opened on a positive note & was 250 point + at one point however selling pressure emerged once again and markets gave up all the days gain to close up flat. In the process market formed a 'shooting star' pattern on the charts and it can have strong bearish implications in case we see follow-up selling on Monday (below todays low).

In last post we had mentioned that overall markets seems to be in a range but the range seems quite big (16500-18500). Now looking at charts its possible that we may fall towards the lower end of this trading range (especially if we see weakness below 17K levels on Monday/Tuesday). hence we have changed the medium term indicator to 'Down' for the time being. There are more negative points than positive points on the chart so its better to pick a side instead of waiting on the sidelines.

Now lets talk about some of the points which are bothering us. Firstly, there was a strong pullback which started yesterday from the lows of 16850. Now markets have made a double bottom at 16850 which is a positive sign had market continue to move up from there. After a vicious fall of 1300-1400 points from top, 3-4 strong trading sessions were expected of markets, instead Nifty succumbed on 2nd day of pullback and its failure to hold on to its intraday gain today suggests weakness is still there and same also indicates that probably one more leg of selling is still pending.

We consider levels of 17450 as the 'breakdown' level of this fall, selling had intensified & turned ugly once this level broke early this week. It was important that Nifty had moved back above this level to regain some of the lost ground. However todays fall (even though markets just closed flat) from just below 17400 levels indicates that 17400-450 is now turning into a significant resistance and unless Nifty climbes back above it, theres is risk of markets moving back below 17K levels.

Another thing worth noticing is how markets expired yesterday. Some pull back from 17850 levels came at just the right time as if to give the incentive to buyers to roll over/ carry forward their position to next month series. Now there is a growing consensus in the markets that there exists strong support in the 16800-17000 zone which worries me a bit. Any support or resistance level which is known to everyone hardly ever holds.

In summary, looking at the way market has traded in the last 2 days, theres a probability emerging that another round of selling is possible from current levels which could take markets below recent lows (16800 levels). Hence caution is still warranted and bottom fishing should be avoided for time being let market build/show some strength ( move above 17450-500) before concluding that worst is over. 

Happy Trading!