Nifty Tomorrow: Prediction, outlook and Nifty Trend for 25th May 2022

 Trend:👇(Down) - Reversal above 16650

Nifty @ 16125 down 90 points: Downswing Maturing?

In the last post (when Nifty was around 16300-400), We had discussed how markets are forming an 'Expanding triangle' and likely to fall below 16K level. We had also discussed that 'E' leg needs to be bigger than 'C' leg which mans a new bottom below 15750 is a possibility.

We did see some weakness in Nifty & Markets fell below 15800 in next few trading sessions itself however inspite of that, till now,  'E' leg has remained smaller that 'C' leg which raises two probabilities. (A) entire move is still unfolding like a 'Neutral triangle' where in C leg should be the largest leg of all directional move Or (B) its still an 'expanding triangle' only and one more leg on the downside is still pending to be unfolded.

Now one important thing to note is that 'E' leg has already consumed around 33 trading sessions which is similar to C leg time wise. In expanding triangles 'E' leg usually is sharper and faster than 'C' leg so ideally speaking by now Nifty should have broken below 15700 levels, which is not the case. 

Nifty Daily

Another imp point to note is the gap-down area of 19th May. On 19th May markets opened with a huge gapdown below 16K levels and closed at 15800 but the very next day this gap-down area was cancelled out with a gap-up opening. This is called "island reversal" and it carries bullish implication if not filled in next 1-2 trading sessions.

In nutshell, even though both options exists & overall trend of market is still down, there are early indications & a small probability arising that probably markets have done with  the bottom at 15750 levels and we could see some upside from here. Nifty has strong resistance at 16550-600 levels and moving above it could be the first strong signal that the last 8 months correction is coming to an end & trend is changing to UP. Falling below 16050-16000 levels (and filling the gap-up area) on the other hand could indicate that 'expanding triangle' is still unfolding and markets can fall further and create a new low below 15750 levels.  Traders should note the above two scenarios and then trade accordingly.

Happy Trading!