Nifty Outlook and Trend for 14th May 2019

Medium Term Trend: ↓Down ( up above 11640)

Market update: 9th Day & counting- Nifty fell yet again and its going worse day by day. It fell by another 130 points to close at 11148 levels.

 

Bear sentiments continue to rule and are getting stronger by the day. Seems like markets are now factoring in a weak BJP govt at center. However today markets have completed 9th straight day of fall ( which is nearing a record streak) but the problem market is now facing is that after falling for so much even a pullback wont be able to push it up much higher.

 

11200-220 was a key support zone for markets and today for a brief moment it touched 11220 and moved to 11275 levels but a sharp reversal from there pushed Nifty below 11200 and once it broke there was a free fall all the way to 11130 levels in a matter of minutes.

 

Now the next key level ( and its the last support level) is at 11060-11110 range. This was the previous swing high of Nifty and also the break out point of this rally hence should offer some support(again to which extent that remains to be seen). if this level is taken out then even the long term trend line will change to down. Seeing how the markets have been behaving in last few days its a very strong possibility now.

 

At the time of writing this post Dow future is down by almost 500 points, now since last couple of days dow is recovering from its day low and putting up a smart recovery however it will be difficult to do the same 3rd day in a row. In case we have a bad day in Dow tonite and global markets again open weak tomorrow then Nifty probably will again open in red. If Nifty opens down but hold on to 11100 levels or opening lows then some amount of buying ( purely momentum) can be done in 11060-11100 range ( keeping a strict SL of 11040).

 

On the upside Nifty is likely to face a very stiff resistance in 11350-11400 range now and further gains are expected once 11400 level is taken out now.

 

Just to count few positive, daily RSI has touched 30 and generated a positive divergence on the chart, similarly a positive divergence is also seen on hourly charts (but remember divergences on chart can continue for a long time). Nifty OI continue to remain around 1.7crore which is pretty low and it didn't add any open interest even today.

 

For now keep an eye on 11060-11100 level which is the last support for this entire move and if we do see any bounce or pull back then we need to observe if Nifty is able to take out 11350-11400 zone.

 

Happy Trading!

Nifty Outlook and Trend for 13th May 2019

Medium Term Trend: ↓Down ( up above 11640)

Market update: 8th day and counting- Nifty fell yet again and closed down 20 odd points at 11280 levels. Actual close was around 11256 ( yesterdays low)

Bearish sentiments continues in Nifty and it keep falling. Prospect of BJP not getting full majority (satta market is projecting around 240 seats for NDA) along with weak global markets might be impacting sentiments for the immediate term. However sentiments cannot govern markets for too long so it will be interesting to see if Nifty continue to stay weak next week as well.

Most technical parameters remains on the bearish side and because of some sideways consolidation today, the short term indicators are not as oversold as they were yesterday. However market cannot continue to fall continuously, historically we have seen markets moving in one direction for max 9-10 days in row and now we have completed 8 days so a bounce back is definitely on cards in next 1-2 days. But the question is how far the bounce back will stretch and whether it will sustain there or not.

Situation has suddenly turned gloomy from euphoric. Few days back everyone was talking about 12K+ levels now suddenly in matter of 3-4 days skepticism is in the air and many analyst have declared that top is done for the year at 11850 levels and markets are headed towards 10500 and 10K. It might be true, not denying but in the midst of all this destruction and chaos there are still couple of things which are still positive ( even after the carnage we have seen).

Firstly, just look at the daily RSI, its sitting at 35. when was the last time RSI touched 35? answer is in March when Nifty was @10600. Continuous fall in RSI from here is only going to create some strong +ve divergences on daily charts.

Secondly, Nifty OI. Its abysmally low at 1.7 crores and in last few days it has lost a lot of open interest which suggest existing longs have been cut ( instead of new shorts being added). 1.7 is pretty low and indicate that the positions in F&O is pretty light and people are not leveraged at all. Historically speaking all major falls have been observed when everyone is heavily leveraged in the markets.

Now I am not suggesting that one should go and buy this market, offcourse not, all I am saying is not everything is gloomy and for bulls there is still some glimmer of hope left. For any bullish positions to emerge, as a first step, nifty should go on and cross 11550 in next week and start spending some time there. So if there is a pullback next week it should stretch atleast to 11550-11600 levels, if it fizzle out before that and market reverses again from lets say 11400-11450 or even 11500 levels then probably the last glimmer of hope for bulls would die too.

  

Happy Trading 

Nifty Outlook and Trend for 10th May 2019

Medium Term Trend: ↓Down ( up above 11640) 

Market update: Nifty continued with its bearish trend ( 7th day in a row) and dropped to 11250 levels before closing at 11301 (down 55 points).

We had mentioned yesterday that Nifty has a support around 11350-375 ( yesterdays low/close area) and if its taken out then we are headed straight to 11220 levels. Nifty made a low of 11250 levels before giving a small bounce of around 100 points but it couldn't sustain it and again dropped 50 points from there.

Market trend remains down and all technical indicators on most time frames have now turned negative or bearish. Having said this markets have now reached an oversold territory and given the fact that markets have been falling from last 7 days, some amount of short covering or a pullback cannot be ruled out.

Nifty has some good support at 11220 levels and today it came very near to it . At the time of writing this post, Dow is down by a whopping 400 points so probably Nifty is going to open again in red tomorrow.

So nothing much to add, Market remains in a strong bear grip but a tad oversold so shorting around current levels is not recommended. One should wait for a pullback and short only when pullback gives sign of reversing. Keep an eye of 11220-11200 levels for immediate support.


Happy Trading!

Nifty Outlook and Trend for 9th May 2019

Medium Term Trend: ↓Down ( up above 11720) 

Market update: Nifty had another bad session (6th in row) where it dropped more than 100 points. It touched a low of 11350 and closed at 11360. Down 130 odd points

We had mentioned yesterday that Nifty needed to hold 11446-485 levels to maintain the trend on the upside, however today its broken conclusively hence the trend is changed to down. Previously Trend was marked as up when Nifty had crossed 11K levels in first week of March. Trend has now changed (to down) after almost 2 months now.

Even though the market trend is down now , Nifty is looking oversold on hourly charts ( RSI touched 20 intraday) hence some amount of consolidation or pull backs can be expected before nifty start moving down again.

If we assume that the top is now done at 11860 levels then there are few critical levels to watch out for. First support is there at 11350-11375 which is also nearing todays low and is 38.2% retracement level of the previous move if 11350-75 is also taken out then we are heading straight to 11200-11220 levels. There is a possibility that Nifty has broken a H&S pattern ( neckline at 11550)  and the bearish implication of this pattern can take Nifty to 11350-11200 levels as well ( which matches with the above levels).

For any bullish scenario to emerge, Nifty Needs to conquer the huge gap down that was created 3 days back (11640-11700) only a close above 11700 levels can and will change the trend back to 'up'.

In a nutshell, though trend is down , one should not be in a hurry to short at current levels because of oversold conditions (Also today is the 6th consecutive day of fall) wait for a pullback first and sell only when pull back ends and markets start moving down again.

VIX continues to rise and is sitting at 26 (which is the highest level of last 3 years) hence huge swings can always be expected.

Happy Trading!

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!!