Nifty Outlook and Trend for 30th May 2019

Medium Term Trend:  ↑UP (down below 11400)

Downward bias: Nifty Opened slightly weak around 11900 levels and after consolidating around 11900 for most part of the day it dropped to around 11850 levels. Nifty finally closed at 11860 levels down 70 points.

We have been mentioning since last few days that  because of various factors ( huge OI at 12k calls , possibility of an extracting triangle & the dragonfly doji yesterday) caution is advised at current levels. Nifty needed to cross and sustain above 11975 levels which it failed to do & as a result market traded weak and has again moved and closed below 11875 levels ( which was the previous resistance level). Nifty has been able to give just 2 closing above 11875-11900 levels  (we needed atleast 3 close above 11900 as we had mentioned in our earlier post).Now the entire band of 11900-11975 is likely to offer strong resistance to Nifty. On the downside support exists at 11810 & 11750 levels.

Since Nifty has failed to cross 11975, the current rally still remains smaller than previous rally hence the possibility of extracting triangle is still open. Also today Nifty has made a lower bottom and lower top on daily chart and closed below the low point of yesterday ( below Doji low). Further weakness below todays low could mean sideways to down movement is likely to continue for now.

So for now we continue with same outlook. Nifty needs to cross above 11975 levels and failure to do so might cause some sideways movement or correction however the trend remains up as long as 11400 holds so Nifty has plenty of room to go down and still remain up overall.


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Happy Trading!

Nifty Outlook and Trend for 29th May 2019

Medium Term Trend:  ↑UP (down below 11400)

Market Consolidates: Nifty Opened today @ 11958 levels but immediately dropped to 11900 levels. It kept trading around 11900-920 levels through out the day and for a brief moment even dropped to 11875 levels but immediately recovered & closed flat at 11928 levels.

Yesterday we had mentioned that Nifty needs to cross 11970-975 levels to negate the 'extracting triangle pattern' . Those levels are still not crossed hence probability of 'extracting triangle' still remains (though it has weakened a little bit now).

On daily charts, Nifty today posted 'dragonfly doji'. A 'dragon fly' doji is a candlestick pattern where opening and closing rates are almost same but candle has a long lower shadow. Such pattern are also indicatives of probable exhaustion or trend reversal. Need a strong close above todays high to push market higher from here.

12K Call option continue to have open interest of around 4 million shares which is pretty huge ( and it seems most of these calls are written by smart money) hence for now markets are likely to be under pressure for couple of more days atleast. Even though overall trend of the market is bullish and 12500 level is likely in near future but if markets are not able to conquer 970-980 levels soon there is a probability that it sees one more fall before that happens.

Usually markets have a habit of  making tops on euphoric days and bottoms on panic days, 12040 top hit by markets on election result day still stands  even after 3 days. Now markets can go and make a new high tomorrow itself we are not disputing that, its entirely possible. All we are saying is that there is a chance of markets giving a little or big correction from here before that happens.

Any correction if comes, as long as it finishes above 11400 levels should not be a major cause of concern for bulls & should be an excellent buying opportunity only. We are bullish on the markets but with  a caution, its not a market where you can blindly buy at any level.For now keep watching 11975-12000 to 11800-825 range as break on either side will give us further clues about what markets intends to do in short term.

Happy Trading!

Nifty Outlook and Trend for 28th May 2019

Medium Term Trend:  ↑UP (down below 11400)

Another Strong Day: Nifty opened slightly weak at around 10830 levels but immediately started moving up. It hit a intraday high of 11957 & closed at 11925, up 75 points.

Nifty had a good resistance at 11875-11900 zone which it crossed today. We have had one successful close above 11900 zone need to see if Nifty can sustain above this level in the next couple of session as well. Sustaining above 11900 level will be a sign of strength however 11950-11975 is another very strong resistance zone. Nifty almost touched 11960 today so sustained trading above todays high is required to push Nifty higher.

In last post we had mentioned a possibility of a bearish extracting triangle which can have negative implications for short term. That possibility still stands and markets appears to be in E leg ( last leg) of extracting triangle. If you notice all directional legs ( i.e, A, C & E) the A leg measured around 750 points ( 11108 to 11850), C leg measured around 360 points ( 11680 to 12040) and E leg has measured around 343 ( 11614 to 11957) today. So as of today, the current leg remains smaller than previous leg. (Rallies are getting shorter and falls are getting bigger). This pattern will be negated once Nifty crosses 11970-11975 levels.

Also, 12K strike levels continue to have a massive buildup of OI in calls so probably Nifty will find it a bit tough to move above 12K before expiry atleast. Other than that, for medium term the trend remains up and will remain up as long as the gap we saw after exit poll results ( 11420-11600) is not filled.

In nutshell, market trend remains up but be careful & cautious in 11900-980 zone because of expiry related and other technical factors mentioned above.

Happy Trading!

Intraday Trading: Pivot Trading system.

While I don't recommend Day Trading, there are many who are interested in Day trading only and keep asking me what is the best way to trade Intraday. So for their benefit I am explaining one of a very effective Day Trading method . Its called pivot trading system and its simple yet extremely powerful and accurate. More often than not it delivers however key is to patiently wait for the levels before you initiate your trade.

You just need to spend couple of minute before the market opens and you will be ready to trade.To calculate pivot levels & support/resistance you need : Low, High & close of previous day.

Lets take example of Nifty. Suppose previous day low was 11500 high was 11610 & close was 11520

Now your pivot level = (11500+11610+11520)/3 = 11543
Resistance 1 = Pivot level*2 - low of day  i.e, (11543*2)-11500 = 11586
Resistance 2 =  Pivot + ( High-Low) i.e, 11543 + (11610-11500)= 11653
Support 1=      Pivot level*2 - high of day  i.e, (11543*2)-11610 = 11476
Support 2 =    Pivot - ( High-Low) i.e, 11543 - (11610-11500)=      11433

Now you have all the levels you need to trade ( you should have this info ready by the time market opens). Now once market opens let it settle down for first 30-40 mins and lets say by 09.45- 09.50 AM-

a) Nifty is trading at 11520 i.e, (below Pivot level but above S1)  in this case you Buy nifty once it crosses 11543 and sustain for couple of mins ( with a SL of 11476 S1) but if it starts moving down and break below 11476 (S1) then you short sell with a SL of 11543

b)  Nifty is trading at 11550 ( above Pivot but below R1): in this case you buy  when Nifty crosses 11586 (i.e R1) with a SL of 11543 ( pivot) and sell if Nifty break below 11543 ( pivot)

c) If Nifty opens between R1 & R2 then buy above R2 with a SL of R1 & if Nifty is trading between S1 & S2 then sell below S2 with a SL of S1

d) If nifty is trading very close to pivot point itself then wait for S1 or R1 to break before trading.

It is very simple and effective and can be used for any stock or futures ( online calculators are available to calculate pivot levels and one can use them But I listed the formula here so that you know how it works)

Practice this for few days and am sure you will find it useful and working. But like all trading rules the key rule here is the discipline. So trade with discipline.

Nifty Outlook and Trend for 27th May 2019

Medium Term Trend:  ↑UP (down below 11550)

Strength returns: After falling around 400 points form days high yesterday, Nifty found strength today and rose to 11850 levels. It made a strong close at 11841 ( up 187 points).

In last  2 days VIX has fallen around 50% ( from 29 to 16) which in turn has destroyed premiums of options across various strike prices. We had mentioned ( more than once) in our previous posts that 11640-700 is a strong support for market and unless it breaks, the trend will remain strong and on the upside. Inspite of falling 400 points yesterday Nifty held on to its support and today gave more push up.

So is it safe to assume that fall yesterday was just a profit booking and now that markets are settled and the move has resumed? Probably so, but we need more strength above 11880-11910 levels( todays high) to conclude the same. Yesterdays fall was a ibt too strong and probably markets will be spending a little more time around 11700 before moving up from here. Market trend remains up but with a caution & another bout of profit booking can not be ruled at this stage.

One disturbing thing (for bulls) to note is that, on daily charts, the entire rise from 11108 is looking like one extracting triangle where rise are getting shorter and falls are getting bigger ( and it seems in its last E leg). Nifty needs more strength above 11900 levels to negate this pattern ( which can have strong bearish implications going forward).

So overall market are in uptrend but further profit booking and weakness as a result can not be ruled out however as long as 11600 and 11550 levels are holding, the prospects of Nifty hitting 12K+ levels is still there. For any bearish scenario to materialize , we need to see strong fall from here breaking below 11550-11500 levels in next few days. More time markets spends above 11600, more the chances of markets going further up from here are there.

Happy Trading!