Nifty Outlook and Trend for 8th May 2019

Medium Term Trend: ↑(UP) 

Market update: Nifty had another bad day today and it dropped by another 100 points to close below 11500 levels.

There were many who were banking on 11550 level support believing it wont break but we had mentioned clearly in our update yesterday that there is a strong probability that 11550 wont hold this time. We had also mentioned that break of 11550 might create a panic in the market and it might invite further selling and that's how exactly Nifty behaved today, once 11550 was broken it dropped below 11500 in a jiffy.(Today was the 5th consecutive day of red for Nifty today).

We had also mentioned that as long as 11465-485-500 range is intact the medium term trend stays up for market. Nifty made a low of 11485 today so for now the trend stays up. We need to see if market takes support around todays low and attempts another pullback from here ( in which case 11750 levels can again be tested) on the other hand another bad day and break below 11460-485 levels ( closing basis) will change the Nifty trend to down for near term.

Nifty now has a very strong technical gap down ( made yesterday) which stands at 11640-11700 levels and its important that same is filled asap ( for markets to have any chance of testing all time high once again). If the gap holds and market start spending too much time below 11500 levels then probably we can say that near term top is done at 11850.

Nifty has been making rallies which were getting shorter and shorter ( which was a sign of weakness) hence the weakness in market is not entirely unexpected however the momentum and sheer force markets has shown on the way down is pretty unnerving for bulls. Also on daily charts, the last 20-25 day move is looking like a H&S pattern with a neckline at 11550 which was broken today ( if its true then can have severe bearish implications for markets in near term).

In nutshell, we need to observe if break below was 11550 today was just a false break intended to create panic in markets and whether markets take support at these levels and again start moving up or if this indeed is a fresh move on the downside and the markets are finally ready to correct the entire upmove we saw from 10600 to 11850 levels.


Happy Trading!

 

Nifty Outlook and Trend for 7th May 2019

Medium Term Trend: ↑(UP) 

Market update: Nifty opened with a huge gap down at 11600 levels today and kept trading between 11600-11625 levels for majority of the day. It closed down 115 points at 11598 levels.

In previous post we had mentioned a possibility of Nifty making an ascending triangle and the fact that usually such patterns sees an break on the upside ( such patterns are often continuation patterns). However the weak global sentiments triggered by trade tariff between USA & China ensured that markets adopt a different trajectory in the near term and the pattern is broken on the downside.

Having said this we had also mentioned that a probability of testing 11550 is also there and this time if 11550 if tested probably wont hold. Today Nifty made a low of 11571 so it held for now, however now there is a strong probability of Nifty breaking below 11550 levels in next few trading sessions but even then the medium term wont change for Nifty. As long as Nifty is trading above 11460-11485 levels the uptrend stays intact.

Going forward, there could be a possibility that 11550 is broken which invites further selling but the fall is arrested around 11480-11500 levels and Nifty resumes its uptrend ( bear trap). But if the weakness persists below 11500 levels and break below key levels mentioned above ( closing basis) then probably the upmove is over for time being and we can see a trend reversal.

Market has seen lots of congestion around 11750 levels and usually the congestion is not observed during top areas, congestion is seen as a sign of accumulation. 

In summary, as long as 11464-480 is held nothing changes for the market and the current fall could just be a final shake up by the market before it goes up for another leg on the upside. For now one should not attach too much importance to 11550 levels , its break might create panic for a while but its important to observe if market attempts to take support around 11500 levels.

Happy Trading!!

Nifty Outlook and Trend for 6th May 2019

Medium Term Trend: ↑(UP) 

Market update: Nifty played out on familiar lines today and once again failed to cross 11790 levels. It kept trading  around 11750 levels for majority of the day but failed to break above the usual resistance and dropped to 11700 levels in last 30 mins. It closed 10 odd points down at 11712 levels.

Last week Nifty had closed at 11750 levels, this week was a short truncated week (with only 3 trading days). Nifty closed in negative territory on each day this week but still the weekly close is just less than 40 points down. this shows, for now momentum is missing from the fall. in the last 2 days Dow has fallen by more than 300 points but still markets have not moved. Both Dow and Nifty continue to trade near there last year high (both failing to sustain above it as well).

Having said this, the contracting environment which we are witnessing for last few weeks still continues and all Nifty rallies are getting shorter and shorter. Nifty continues to offer a horizontal resistance line which is sitting at 11775 levels & on the downside the support area is continuously rising. Previously it was 11550 then 11630 then 11650 and now 11700.

On Expiry day Nifty had made a high of 11795 and a low of around 11625 levels, its been 4 days since expiry but market has still not broken the highs and lows of expiry day (pretty interesting) and just moving within that range.

A flat resistance line and moving support zone is indicative of ascending triangle in the making and more often then not such triangles sees a break on the upside ( such breaks may or may not sustain). But if Nifty start breaking recent low and start trading lower then 11475-11500 will come into play. In the current scenario its looking difficult that 11475 levels will be taken out and until that happens the trend will not change.

VIX continue to surge ahead and moved up by 5% ( Its closed above 24 today). Such high levels were seen way back in Q1 2016 when Nifty was at 7K levels. Probably it will cool down once election result are out of its way ( 23rd May).


In nutshell, If Nifty break above 11800 levels then further rise can be expected, however if weakness continues then probably we can test 11550 levels once more (probably break it this time). But in current scenario breaking much below 11500-475 levels is looking a bit difficult so even if Market drops there it once again could be a buying opportunity.


Happy Trading!

 

Nifty Outlook and Trend for 3rd May 2019

Medium Term Trend: ↑(UP) 

Market update: Nifty again had a volatile day ( in a small range though). It kept swinging wildly in 11700-11780 range for whole day before settling at 11725, down 25 odd points.

Yesterday we had mentioned that 11795 is the immediate critical level for Nifty ( and after that 11850-60) today nifty made a high of 11790 but couldn't cross/sustain it. Market is consistently seeing some selling pressure at 11750-11800 levels at the same time buying is emerging whenever Nifty drops by 80-100 points.

Market is in a narrow range and the range is contracting on daily basis and once this contraction is complete probably we will see expansion in prices. VIX again moved up today and closed at 23. VIX has risen more than 60-70 in last few weeks ( probably due to election result). But rising vix is highly indicative of the fact that prices are not going to be contained in a small range for too long and one should not be surprised to see wild swings in the market.

Nifty might have failed to cross 11790-800 levels but it has spent too much time around 11750 zone ( today was the 5th day in a row when Nifty touched 11750 intraday) and so much of congestion around 11750 could mean that one more leg of Nifty is still pending on the upside. If 11800-850 was the topping zone , we should have seen some bit of fall by now. Usually when tops are made they make an inverted V shape (🔺) which means top area is visited for a short time (once or twice probably) and prices reverses swiftly from there . Too much trading around top could mean that accumulation is going on and market can rise further. this remind me of 10985 levels in Jan/Feb markets kept reacting from 10900 levels but eventually broke it.

Having said this, market is still making rallies which are getting smaller and smaller and the move from lows of 10600 is overstretched and has already put on more than 1200+ points and it still to be corrected hence a word of caution.  However if market falls from here it can take support at 11500 levels and no serious downmove is expected as long as 11475-500 is intact. On the upside keep an eye at 11795-800 levels and 11860 levels as breach of these levels can trigger further buying in short term.

Happy Trading!!

Nifty Outlook and Trend for 2nd May 2019

Medium Term Trend: ↑(UP) 

Market update: Nifty opened weak on Tuesday but once again buying emerged at lower levels ( around 11660) and pushed market back to 11750 levels.

The support area for Nifty is moving up with each day, earlier support was being witnessed at 11550 levels now its moved up to 11650 levels. Resistance too is moving down ( 11860 then 11795 and last week 11760). This contracting pattern is basically pointing to a triangle in making which indicates that after contraction is done prices will start expanding.

Now since this contraction is taking place at top most probably prices are expected to break on the upside however its not mandatory.

In previous post we had mentioned how the rallies are getting shorter. To negate this pattern we need to see current move (which began from 11550) to put on more than 310 points which translates roughly to 11860 levels in Nifty ( which is also the last top area).

Same pattern is witnessed on the hourly chart as well (rallies getting shorter) and the previous rally on hourly chart measured 130 points ( 11630-11760) and now the current rally has measured almost 95 points ( from 11660-11755 on Tuesday). Now if nifty adds further 30-40 points over Tuesdays high then  it will break the current pattern on hourly charts ( as the rally will become bigger than 130 points).

Hence the two critical levels to watch out for are 11795-800 and 11860 ( both of these incidentally are the recent swing high as well). On the downside if Nifty break below 11650 levels then 11500-11475 can be tested. any major downswing can be expected only when 11475 level is taken out, till then trend remains up.

Happy Trading!