Trend:👇(Down) - Reversal above 17300
Nifty @ 16680 down 400 points- weakness to the fore, bears on top.
In previous post we had mentioned the probability of market forming an expanding bearish triangle ( where E>C>A> and D>B). We had also mentioned that even though 17100 has been supporting market this time its possible that its broken for good. The above analysis was in danger of proving incorrect as markets agains bounced and touched levels of 17400 (just below our reversal level) in next couple of trading sessions itself. However after touching 17400 markets once again reversed and this time the sharp was fall and severe and hs taken markets to below 16700 which means a fall of around 700 points in 2-3 trading sessions, reiterating the importance of technical analysis.
Movement of last 10 days (ever since Nifty hit a low of 16850 on 19th Apr) is suggesting some sort of consolidation which seems to have been over on Monday just below 17400. Now markets probably has opened a new leg on the downside which can take markets below 15750 ( previous swing low).
Remember, expanding triangle is a bearish pattern wherein the markets have not yet hit a low. As advised in previous post, both A & C (directional down leg) lasted for around 9-10 weeks and E leg is in its 4th week only so this downswing can continue for another 4-5 weeks ( entire May month atleast).
In Summary inspite of smart pullbacks we are witnessing from time to time market remains bearish and these pullbacks are just acting as 'bulltrap' which would ultimately result in more weakness. For now its advised to stay out of long position. Traders are used to seeing Nifty take support around/below 17K levels and then bouncing back but such resilience can not last forever. E leg of expanding triangle is usually the ugliest of all 3 legs hence maximum caution is warranted
Happy Trading!
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