Nifty Outlook and Trend for 18th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty opened strong at 11370 levels and went on to touch 11480 levels before giving up a sharp fall towards 11400 levels towards the end. Nifty finally closed at 11425 levels ( up 80 points).

 Nifty opened strong but it wasn't technically a gap up opening ( open rates were lower than yesterdays high) so the exhaustion gap market made yesterday stills stands. We have been saying that markets are trading in overbought zone & today they went into extreme overbought zone. When Nifty was trading at 11480 the hourly RSI was as high as 90. Now we are not sure when was the last time such extremes levels were seen. Having said this please keep in mind that market can remain overbought zone for many days/week even months.  Daily RSI crossed 75 which again is an extremely overbought zone. It remains to be seen  how market come out of this zone ( Through time correction or price correction or both or trend reversal).

We continue to believe markets are in corrective mode even though last few days rally seems like a fresh impulsive move but its not. Its carrying all the characteristics of a corrective move and it remains a part of overall corrective move which started from 10K levels in Oct'18. In terms of price wise we have completed 80% retracement today ( which was always a technically possibility) however to achieve that market has spent 250% time already and by next Wednesday it would have completed 261.8% of time.

Also, another thing to note is that Nifty today made a inverted hammer type of pattern which could have bearish implications if its high ( 11485) is not conquered in next couple of trading sessions.

Hence  we need to closely observe and see if markets changes its trend/tone in next 3-4 days/coming week. If market continues to remain strong and doesn't give up much ground then probably we are stretching towards 300% time correction ( which is a rare but a possibility nonetheless) which will add further 10-12 days to this corrective move.

One interesting thing happened today, VIX added 6% even though Nifty was simply marching upwards. This could be a sign that smart money or big players are getting jittery and expecting volatility to rise in near term. Even we believe ( infact have been seeing for quite a while now) that volatility could increase from here and side ways trend will not continue for long now ( infact sideways trend seems to be over already).

Few days back we had mentioned that Nifty OI has dropped to historic low (1.45 crores) whereas average is around 2 crores. Traders were getting tired of Nifty sideways movement and hence exiting. Now today the open interest is back to 2.06 crores. So probably traders who exited around 10600-10700 levels have again started buying & coming back into markets.

In nutshell, we repeat what we said yesterday. Observe market carefully for next few days, a correction (big or small) is definitely round the corner but it remains to be seen if it would just be a correction or eventually turn into something more than just a correction.

Happy Trading!






 

Nifty Outlook and Trend for 15th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty opened with yet another gap at 11380 levels but couldn't sustain and dropped to 11310 levels but bulls prevented any further drop and it finally closed flat at 11340 levels.

We had mentioned in previous posts that Nifty has already given 3 gaps and after 3 consecutive gaps (which sustained) the next gap is likely to be an 'exhaustion gap' meaning it is not sustained & filled up on same day/next day. Nifty opened at 11382 (with a gap of 32 points) but filled it within first hour of trading itself. This is in contrast to what Nifty has been doing recently (i.e, opening with a gap then building further on it).

Markets have been trading in overbought zone for last few days and they looked pretty tired yesterday. Same is the case today, even thought Nifty closed flat, fact that the closing has come below the gap up area is probably indicating some cooling off to come in near term. Also we have completed 95 days today which means overall corrective pattern has finished exactly 250% of time ( of previous fall from 11750 to 10K). In next 4 days we will be completing 261.8% so it will be interesting to see if market changes its direction/trend or tone in next 1-4 days that will give us some hint on overall direction market may be planning in medium term.

Nifty has turned overbought and has given a strong rally in last few days so a correction is definitely expected. but please keep in mind this could be just a correction which means it will be a buying opportunity however if Nifty goes on to break below 11100-11070 levels in next 3 days and then goes on to break below 11K level as well then probably we can say its a start of new trend on the downside.

We are sitting at crucial levels both in terms of price and time hence lots of caution is required. Sideways movement we have been witnessing for last 2-3 months is probably already over ( evident from the fact that markets have started moving strongly now).

In nut shell keep an eye on Nifty for next 3-4 days as its movement in near term could be prove to be very crucial.

Happy Trading!!

Nifty Outlook and Trend for 14th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty opened positively today but quickly drifted into negative territory however buying support pushed it back up again and it made a high of 11350 before closing at 11340 levels ( up 40 points).

Nifty continued its upward journey & it remains overbought & negative divergence continues on major indicators. Today it appeared as if markets have got tired now, It has been moving non stop in one direction and some bit of correction is definitely overdue now. Level of 11400 in Nifty ( Sensex 37860) was a possibility and today Nifty almost touched it ( just fell short by few points).

We have been saying though price movements is consistently moving up, there are plenty of indicators warning caution at current levels. Today the daily RSI touched 74, last time it touched 74 was way back in Aug 2018 ( when Nifty was trading at 11750). Now if Nifty moves further from here, RSI will make a new high while Nifty would still be below Aug highs, now that is a very powerful negative divergence.Not saying its a confirmation of bearish trend (negative divergences can continue for long even for months) but just highlighting that its an important point and must be kept in consideration.

Coming back to this entire rise from 10K levels , today was the 94th day & we had mentioned in our previous posts that corrective moves usually last for 250-261.8% of previous moves. That gives us 95-99 days. Now if this entire corrective moves beyond 99 days that means it can extend till 300% (which is not very commonly seen and is rare but a possibility). 300% gives us 114 days. So this entire corrective move can further stretch for 1-3 weeks more (if not completed in next 1-4 days).

Another point to reckon is that in corrective moves, sometimes the last leg mimics the first leg. From the lows of 10K Nifty had risen to 10750 levels in 15 trading sessions (In Oct/Nov). That means ~750 points in 15 trading sessions & that had kick started this entire upmove/corrective leg. Now from the lows of 10600 (in Feb) Nifty has exactly risen 750 points ( 10600-11350 today) and that too exactly in 15 days. So we have one more strong indicator here but again we are not saying that its a confirmation signal for a trend reversal, all we are saying is that there are too many indicators pointing that this could be a critical area ( both in terms of price and time). So be watchful.

Happy Trading!


 

Nifty Outlook and Trend for 13th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty posted an exact replica of yesterdays trade today. It opened +ve with a gap & kept on moving higher throughout the day. The rise & gain of last 2 days have perfectly been in a sync.

Last two days buying frenzy has pushed markets into overbought zone though markets can remain overbought for long still a little bit of cooling off is expected soon now ( even if not a selloff). Today was the 3rd consecutive gap up by markets. In one of our previous post we had explained the concept of 'exhaustion gap'. After 2-3 consecutive gaps the next gap can be an 'exhaustion gap' meaning it gets filled up. So if market again opens with a gap, then one needs to be careful as usually all such gaps are filled intraday/next day & sometimes the move can be strong and it fills all previous gaps( first gap in this scenario occurred at 11K levels). Continuous running gaps are indicative of a bullish behavior where buyers feel they have been left out and they just go all out scrambling to buy. This behavior is also called 'panic buying' ( opposite of panic selling where everyone just offload their holding fearing capitulation in markets).

Last  2-3 weeks Nifty movement is looking like a start of a new trend however there are couple of things which are suggesting that it may not be a new trend. Firstly It is too slow and secondly its coming off too late. Bank Nifty posted a new lifetime high today but broader market is lagging bank Nifty.

For now technically, it remains a corrective move and like we mentioned yesterday, today was 93th day of this corrective move (previous move was 38 days) so we have spent almost 250% time. Next 5-6 trading session ( middle of next week) would complete 261% hence warning caution at these levels. Nifty may run from here every things possible but it is also possible that this is the last leg on the upside which might trap traders on the wrong foot.

Nifty Outlook and Trend for 12th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty Opened sharply up at 10780 levels and kept moving higher and higher and closed almost at the highest point of day at 11170 levels up 135 points.

Now since Nifty has crossed previous high with so much momentum and force, we have changed the near term to up. However please keep in mind that overall this leg remains a corrective rise and though it might stretch for a bit, it can finish suddenly without warning so inspite of markets breaking above previous highs, no fresh longs are advised at cmp.

We had mentioned yesterday Nifty needs to break below 10780 levels in next two days to confirm start of a new leg on the downside. Markets on the other hand have made a new high today.Todays high assumes lots of significance as 11171 was the previous high for Nifty ( before it was taken out and Nifty posted a new of 11750).

Inspite of the fact that markets made a new high today,there are many things which doesnot seem right at this stage. For starters there are plenty of negative divergences to be seen all around, secondly the volumes seems to be missing also todays rise seems to be news based ( opinion polls predicting BJP win) and lastly markets have turned overbought now.

It might be possible that this is part of pre election rally and Nifty sees higher levels from here and its also possible that its a false breakout ( in which case it should reverse soon).

Technically speaking, this pull back from lows of 10600 remains a ABC pull back but instead of flat its turning out to be zig-zag move.

Another important thing to note is that the fall from 11750 to 10K levels had taken 38 days and now mkts have already consumed around 92 days ( which is almost 250% of total time) and is still sitting below that high (infact its barely retraced 61.8% of previous fall). Now as per rules of Elliott wave/Neo wave, the corrective leg can consume upto 300% of time ( but those are rare) usually markets consumes 150-161.8% to 250-261.8% of previous move.

250%  gives us 95 days & 261.8% gives us 99 days. We have consumed 92-93 days already hence a note of caution, these strong rallies we are seeing are coming too late and next few trading sessions could be really crucial. Having said this, until Nifty takes out 10880-10900 levels trend will not change.

Happy Trading!




                 
 

Nifty Outlook and Trend for 11th Mar 2019

Near Term Trend: ↓ Down

Market update: Nifty opened with a small gap of ~20 points and kept trading in a small range before closing 20 points down at 11035 levels.

Today Asian markets opened weak however nifty once again bucked the trend and closed almost flat when most markets closed 1-2% down.

Nifty once again posted a 'Doji' candle 3rd day in a row. Like we said yesterday, this indecisiveness is warning caution specially considering that markets are above 11K levels.Nifty made a lower low and lower high today but we need a very sharp fall from these levels to confirm a new leg has started on the downside. Nifty needs to break below 10780 in next three days (preferably 2) to give a first signal that its ready to start a new leg on the downside. On the other hand if Nifty trades lacklusture ( avoid falling too much) for next couple of days then probably it can go and test 11100 levels once again too.

Technically the entire move we have been seeing since last 3 months ( from the lows of 10K) remains a complex corrective. Its developing as a double corrective where first corrective got over as 7 legged diametric and second corrective is now seems to be moving as ABC flat.Previously it seemed that the second corrective is developing as triangle however the implications for both the patterns are more or less same.

In nutshell, markets are at a very critical juncture and there is a high probability that this sideway trading or consolidation we are witnessing is pretty close to finishing ( it could just be a matter of days now). One needs to be cautious and carefully observe the market movement for next few days.

Happy Trading!!

Nifty Outlook and Trend for 8th Mar 2019

Near Term Trend: ↓ Down

Market update: Nifty Opened up at 11080 levels however couldn't sustain above it and traded below it for most part of the day. It made a late dash towards the close but failed to close above it and in the process closed flat.

Today Nifty made a second consecutive Doji candle (Doji signifies indecisiveness) and after a strong bullish candle, 2 consecutive doji candles are warning caution at current levels.

Nifty OI remains at records low and today it shed even more OI ( now sitting at 1.45 crores). We had mentioned yesterday that move from 10585 (last 10 days) is clearly looking a corrective move ( this is evident from the fact that even after 10 days Nifty has failed to retrace the previous move which had taken only 8 days). Now point to note here is that even the previous move was a corrective move (from 11118 to 10585) as well.

Now coming back to current 10 days move (from lows of 10585) if you analyse it carefully you can see its a ABC move. A leg started from 10585 and went on to hit 10880 levels in 4 days, after which we had B leg which was an irregular correction and went up to 10940 and ended at 10785(this was a major point of confusion and am sure must have confused lots of traders). Now we have C leg which started from 10785 and made a high of 11088 today (it has also taken 4 days).

So here we have:

 A leg = ~300 points (10585 to 10880) 4 days
 C leg = ~300 points  (10785 to 11088) 4 days ( today was the 4th day)

Both legs are exactly similar price wise and time wise & If this is right then we should see a sharp move down from here but keep in mind a new trend on the downside will begin only when Nifty break below 10785 in next 4 days ( ideally in 3 days by coming Tuesday). If Nifty falls from here but fails to take out 10780 levels then that would mean corrective leg on the upside will resume. In case Nifty doesn't fall and make a new High then most probably this ABC correction is taking some other shape ( other than a common zigzag which we are assuming right now).

So in nutshell Keep a tight watch on 10780, if it gets broken by Tuesday then the chances of this entire consolidation (which we are witnessing since last 3 months) getting over and Nifty starting a new leg on the downside will increase manifolds.

Happy Trading!