Nifty Outlook and Trend for 25th March 2019

Near Term Trend: ↑UP

Market update: Nifty opened  again in the green today (on the back of 200 point gain in Dow Jones) however couldn't sustain and dropped to 11435 levels and finally closed at 11456 ( down 65 points).

Markets were trading in overbought zone for last few trading sessions and like we had mentioned in our previous post that  after 8-9 days of consecutive one sided moves,  a reversal can always be expected ( today was the 9th day).

We have also been mentioning that time wise market is about to complete 261.8%  retracement ( and that 250-261.8% is the generally the max which is observed however even 300% is possible which is rare). Ever since market completed 250% time ( day 94) we were telling traders to be cautious and yesterday mkt completed 261.8% and today we saw a small reversal or a pullback.

However inspite of everything it will be premature to say if market is done with upmove yet and the levels of 11600 will not be seen in immediate term. Today market has taken just a small step back and that doesn't change the overall structure of the markets and it still remains pretty strong However if selling pressure increases from here and market break below 11200 -11150 levels with strong momentum then probably we can say that medium term top has been put in place already.

Having said this  the technical reading is still suggesting a bit of caution here and indicating a probability that Nifty hit the medium term top today/yesterday however it will be confirmed only when we see follow up selling from here that too with lot of momentum and force.

So keep observing markets for next few trading session and if its just a correction developing then it may finish in next couple of trading sessions and without much prices damage however if its a trend reversal then we might see some sharp moves.

Another important thing to note is that during last few months there was a complete disconnect between Dow and Nifty and both were moving independently.Now if one observe charts carefully he can notice that both are standing at same level (Nifty is just few %age points away from all time high & so is Dow & S&P). Even other global markets can be seen at same level hence theres an increased likelihood that divergence or lack of correlation we have been accustomed to seeing between Dow and Nifty is getting over and probably global markets are ready to move in tandem now. So its important to keep an eye on Dow now because what it does from here onwards can be significant and it can lead the way for other markets from now on.

Happy Trading.

 

Nifty Outlook and Trend for 22nd March 2019

Near Term Trend: ↑UP

Market update: Nifty opened slightly in green & kept trading in a small range between 11510 11560 & finally closed flat at 11520 levels down 10 points.

Even though Nifty closed slightly in red, Sensex posted yet another +ve close ( 8th in a row). 8-9 days of a consecutive move in one direction is the max which is seen. Few days back when Nifty fell from 1118 to 10585 levels then too we had witnessed an 8-9 days of straight fall.

Markets continue to remain overbought and everyday it keeps getting deeper in the overbought territory on multiple indicators. However price movement remains on the bullish side and there is no sign yet that its done with the upmove. But keep in mind price movement can turn anytime without any warning so one needs to be very very careful now.

Nifty completed 261.8% retracement today ( in terms of time). It was 99th day of the move from lows of 10K. 250%-261.8% is the general retracement level seen ( max is 300% but its rare). Indicators after indicators are suggesting that markets may correct from here now how deep or long the correction going to be that remains to be seen. Daily RSI is hovering around 80 which is historical high ( higher than even Aug 2018 when Nifty was at 11750).

Overall not much change in our view, markets remain overbought and getting tired now so a correction is definitely round the corner now how deep or long it will be or whether it will be a shorting opportunity or a buy opportunity, that remains to be seen.

Happy Trading!


 

Nifty Outlook and Trend for 20th March 2019

Near Term Trend: ↑UP

Market update: Nifty had another positive day today (7th in a row). After trading in a narrow range throughout the day it jumped above 11500 levels and closed at 11530 (up 70 points).

Markets yesterday had posted a Doji and needed a strong close above it today to negate its impact. While Nifty managed to close above it just by couple of points , Sensex failed to do it & the close is still below the high of Doji it posted yesterday.

Daily RSI has crossed 79 today & markets keep getting more and more overbought. Sentiments are turning bullish and Nifty OI has been seeing a steady increase in last few days ( now back to 2 crore+). Having said this the price movement is not giving any negative indications and all momentum indicators continues to be on 'buy side'. Goldman sachs upgraded Indian markets to 'overweight' which has added to positive sentiments.

Till the time price movements gives any sell signal it will be premature to say if this rally has finished. Hence near term trend continues to remain up however this is the time to be super cautious as markets can give a sharp pullback ( even if its just a temp correction) anytime. If some one is looking to buy then it would be wise to buy on dips only, let markets corrects itself and then buy. Markets never move up or down in a straight like they always move in  a zig zag fashion and once you see markets moving like a straight line for a considerable amount of time then you can always expect a course correction.

We continue to trade near very critical levels and today it was 98th day of the entire move ( from lows of 10K) in next 1-2 days we will complete 261.8% retracement (time wise).So if this entire move is just a corrective move ( which it seems like) then next couple of days could be crucial. Sentiments are turning into super bullish (especially after Goldman Sachs upgrade) which is further warning cautions at current levels.

Happy Trading!
             

Nifty Outlook and Trend for 19th March 2019

Near Term Trend: ↑UP

Market update: Nifty (again) opened strong at 11470 levels and went on to hit 11525 levels from where it dropped 100+ points to 11410 levels before a late bout of recovering pushed it back again to 11470 levels. Nifty finally closed at 10462 up 35 points.

Today was the 6th day in row where markets have closed in green. Nifty made a doji candle on intraday chart, it closed at same levels where it had opened after making a high and a low. So no real body just long shadows ( signifying indecisiveness)

 If you analyse last 3 days of candle, you can see  :

Day-1 Exhaustion gap- Mkts opened strong but couldn't sustain
Day-2 Inverted hammer - Mkts opened strong but gave up most of the gains in late trading
Day-3 Doji - Mkts again opened strong but immediately gave up all gains and couldn't conquer the morning highs inspite of some late buying.

This is reflecting some bit of apprehension and skepticism at higher levels. Nifty is very hot right now its trading in extremely overbought zone yet there is a feeling among traders that markets may just run up from here and they would miss the pre election rally hence lower levels continue to see some buying support for now.

In last post we had mentioned that Nifty need a strong close above 11485 levels to counter the bearish impact of inverted hammer. Markets did open strong but capitulated later and failed to give a closing above 11485 and in the process posted another Doji. So now Nifty needs a strong close above 11530 levels.

Today was the 97th Day of upmove and like we have been saying we are nearing 261.8% level of retracement ( time wise) hence next few trading sessions could be crucial, markets are getting overheated and a correction is definitely round the corner now ( small or big only time will tell).

Having said this the near term trend remains up but keep in mind due to various factors things can quickly change. So don't be complacent if you are long keep booking timely profits or keep a strict stoploss.


Happy Trading


 

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!