Nifty Outlook and Trend for 22nd May 2019

Medium Term Trend:  ↑UP (down below 11550)

Correction check: Nifty today went on to hit a new lifetime high at 11883 but succumbed to profit booking soon after and dropped to 11700 levels. It closed at 11709 down 125 points.

After a massive rally yesterday, it seems profit booking kicked in today which is evident from fall in Nifty OI ( nifty OI fell by 4lac shares today). Nifty was also overbought on the short term charts which could again have triggered this bout of selling but thanks to todays fall, markets are no longer appearing overbought.

Nifty had a good support at 11750-760 levels which was taken out today but the real support zone is 11650-11700 levels and below that 11575-11600. Volatility continue to remain high hence all support levels and SLs are widespread too.

One key thing to note is that when markets had fallen from 11750 to 11108 levels earlier this month, it had made a gapdown on daily chart.  Nifty had closed at 11709 on 5th May and on 6th May it opened with a gap down around 11600, this gap stands at 11640-11700 levels. Bearish implication of this gap-down pushed markets all the way down to 11100 levels.Now there are many who are asking if the rally we saw yesterday was just a false move and Nifty will again start moving down. Well anything is possible but as per our analysis if yesterdays move was just a false move then Nifty shouldn't have crossed 11700 levels and should have closed below 11640 levels (no run away gap area especially those which triggered the move should be closed this easily).

Nifty had opened at 11700 yesterday and immediately dropped to 11600, if it had traded in that zone for whole day ( 11600-700) and closed below 11700 then this scenario (false move) was possible however it immediately went back above 11700 and covered the gap on closing basis and inspite of a sharp fall today the closing is again above the gap area. Now Nifty might again fall below it, not denying, but as long as the 11600-575 is not broken, the bullish trend started by Nifty in last 2-3 days , still stays intact.

Other thing is that there is lot of call writing happening at 12000 and 12500 so in immediate term Nifty might find it difficult to cross and sustain above these levels but these are election time so anythings possible.

Happy Trading

 

Nifty Outlook and Trend for 21st May 2019

Medium Term Trend:  ↑UP( down below 11250)

Up Up & Away: Nifty had a spectacular run today, it opened strong at 11700 and just momentarily dropped to 11600 levels but soon recovered and didn't look back. It closed up at 11830 leaves up 420 points.

Nifty had taken around 8 trading sessions to drop from 11800 levels to 11108 and the entire fall was pretty fast and was even looking like a trend reversal to many and now the entire fall has been fully retraced in 50% of the time ( just 4 days) i.e, with double speed. Also, on its way down Nifty had been constantly losing open interest which we had pointed out in previous post as well and when markets are light they find it easy to move up ( generally big falls are not observed when markets are so light).

So is it safe to assume that fall to 11108 was just a correction and markets are now ready to move up? Answer is of course it is. Market has not left even a tiniest bit of doubt now & everything is indicating that market is ready to move up. Now there is no 100% surety of anything but as far as I can see, tables have turned today and unless 11600 level is broken I doubt we will see any big fall from here.

Just one caution, due to todays mammoth rally markets have turned overbought on short term charts hence some amount of consolidation/sideways movement and volatility can not be ruled out. Election results are still not out so expect markets to remain choppy for now.

Nut shell, market trend has changed to up now and unless we see a quick , sharp and massive reversal , it will remain up at the same time choppiness is likely to continue for some more time because of overbought conditions so trade with a proper SL.

Happy Trading.

 

Nifty Outlook and Trend for 20th May 2019

Medium Term Trend: ↓Down ( up above 11640)

Exhibiting Strength: Nifty put up a second straight day of impressive gains and added 150 points to close at 11407 levels.

We had mentioned yesterday that break of 11300 might lead to further momentum on the upside, Nifty broke above 11300 in morning session itself and kept moving up for the whole day and close around 11400 levels. Inspite of 2 solid days of performance by Nifty its a bit too early to say if Nifty is out of woods. Market has a solid resistance at 11420-11450 levels and Nifty not only needs to surpass it but sustain above it in order to have any chance of resuming its bullish trend.

On the downside 11300-320 levels should act as a good support now ( 11250-220 below that) and break of these levels might push Nifty back to 11100 -11065 or even lower levels.

We can go on and talk about all the levels but there are few times when no level matters and this is one of such times. In longer terms markets will always do what they want to do but in short term its movement will be governed by emotions ( which in turn will be governed by election outcome).

In such times its impossible to tell which way market is going to turn up and there is a strong possibility of Nifty giving a big movement on either side but at the same time there is also a possibility that Nifty will just stuck up in a range. Right now the call and put premium are pretty high and its possible that premiums on both sides will be eaten up and markets will move only after that.

One thing is for sure is that markets already has its eyes fixed on the target ( now that target is 13k or 10k we will know shortly) and irrespective of who comes to center, its overall movement will be in that direction only. Markets will always do what they want to do like in 2004 where it fell initially after BJP lost but then reversed and continued with the upward trajectory.

For now keep observing 11200-11500 range as break on either side might give us some hint on what markets what to do next.

Happy Trading








 

Nifty Outlook and Trend for 17th May 2019

Medium Term Trend: ↓Down ( up above 11640)

Choppiness Continues: After a fall of  ~150 points from day high yesterday, Nifty today rose 150 points from day low to close at 11260 levels up 100 points.

Since last 2 days we have been mentioning that for immediate term 11150-11300 range is important and a break on either side might lead to further momentum in that direction. Yesterday markets tested 11300 and closed at 11150 levels  and today again it hovered around 11150 till most part but didn't break it and then in last hour or so again shot up to 11300.

The way markets have reacted from 11100 levels in last 2 days raises the possibility that probably a counter move is ready to be seen. Now if this countermove is a corrective rally then it will finish in 3 legs ( A-B-C). We are already in C leg, A leg started from 11108 went till 11286, B leg started from 11286 and touched 11136 yesterday and C leg started from 11136 and continues.

Now c leg can take any form, if its an irregular pattern then it can be smaller than A leg and can finish anywhere near 11300 itself. If its a normal pattern then C leg can measure equal to A leg in which case it can go upto 11330 levels and then reverse. If its an extended correction then C leg can measure 150-161.8% of a leg which can propel Nifty to  11380 to 11420 levels.

However there is another scenario or probability as per which the  move started from 11108 couple of days back is actually an impulsive 1-2-3-4-5 move which can take Nifty higher.



Nifty 30 Min chart

So continue to observe markets for now, next few days could be very crucial, if the rise we are seeing is just an corrective move then markets will reverse very sharply anywhere from 11300-11420 levels (always keep this in mind). However if 11420-11450 levels is crossed and markets start spending time around 11500 levels then probably we can say the correction is over and bottom is in place (for time being) at 11108 level.

VIX continues to soar and has reached 28-29 which is pretty high and Nifty futures continues to loses OI (now sitting at 1.5 crores) which suggests markets are very light for now.

Happy Trading!

Nifty Outlook and Trend for 16th May 2019

Medium Term Trend: ↓Down ( up above 11640)

Weakness Continues: After a one day upmove markets returned to its bearish mode. Whole day it moved wildly between 11200 and 11300 and finally broke below 11200 in last half hour and closed at 11057 levels 65 points down.

After falling for 9 consecutive days markets yesterdays gave signs of some stabilization however today again the main trend returned. This raises the question if the bounce from 11100 was merely a technical bounce which got over today and markets are ready to move down again.
 
Like we mentioned yesterday, for immediate basis we need a move above 11300 levels for bullish options and a move below 11170-50 levels for bearish options to open again. Today markets have tested both ends and closed exactly at the lower end of the range which proves that the level mentioned by us are working and are actually important. If markets sustains below it tomorrow then probably 11100 will be tested again and this time the chances of markets breaking below it will be higher (so we don't recommend going long now at 11100 even for momentum or short term trading)

The way VIX is moving up everyday is pretty interesting too. Today it almost touched 29 (last time when VIX touched 29 it was way back in 2015 and at that time Nifty was around 7500-8000 levels).

For now the fall from 11850 is indeed looking like an impulsive move and Nifty need an equally stronger move on the upside to negate it so far the pullback we have seen is too short and looking like a corrective move ( but its too early to judge and we need to see more evidence).

Overall same view stands for now. Keep an eye on 11300 and 11150 levels ( and 11100 below that) for the immediate term movement as break on either side can lead to accelerated movement in Nifty

Happy Trading!

 

Nifty Outlook and Trend for 15th May 2019

Medium Term Trend: ↓Down ( up above 11640)

Market update: Volatility to the core: Nifty moved more than 400 points intraday today. It rose to 11300 levels from lows of 11110 and then dropped to 11175 and from there again rose to 11250 levels. It finally broke the losing streak and on 10th day Nifty put on 70 odd points and closed 11220 levels.

 

Yesterday we had mentioned that 11100-11060 levels is the final support for market and if market drops to around 11100 levels then some amount of momentum or short term buying can be initiated with a strict SL of 11040 levels. Nifty made a day low of 11108 levels and rose almost 200 points from there in intraday itself so there you had some intraday points to be made in Nifty.

 

We had also mentioned that markets can move in a line for max 9-10 days and after completing 9 days of straight fall yesterday the chances of a technical pull back was always there. But the problem is that pull back has come from pretty low levels ( 11100) and it may not take nifty very far now (but that remains to be seen) Nifty rose with a good momentum today and the good thing is there was no negative divergences on short term charts.

 

Now we need to carefully observe how this pull back is shaping up in the days to come. The way markets reacted from 11300 levels suggests that market is going to face stiff resistance at every rise hence one needs to be watchful. at the same time because of such a long losing streak there is always a chance of bounce back.

 

For an immediate basis 11300 and 11170 levels become critical pivot points for Nifty. If 11300-320 level is crossed and sustain for a bit then we can expect another 70-100 point rally ( even more) on the other hand if 11170-50 level is broken then we can test 11100 levels again and if its broken that we are looking at much lower levels in a hurry.

 

VIX is increasing and continue to hover around 27 ( which is pretty high). So in a nutshell we need to see how the current move up is shaping up before predicting the next nifty move. For any bullish option to materialize, Nifty should conquer 11400-450 levels soon and start trading above it for some time. On the other hand if this pull back ends before that then probably its just a pullback and market will start its downward journey once again.

 

Happy Trading