Nifty Analysis: Outlook and Trend for 3rd Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11850)

Corona scare : Nifty had another bad day and after opening strong at 11400 levels it fell to 11040 levels ( almost 350+ points from day high). It recovered slightly to close at 11130 levels, down 70 points.

Morning session promised a lot and Nifty opened and traded around 11400 levels for quite some time however like we had mentioned in our previous post, we needed to see if its showing strength in the gapzone of 11350-11450 or not. Nifty, though opened strong, failed to move above the gapzone and the rest was done by news flow coming in which confirmed fresh cases of corona virus in India.

Overall Nifty continue to trade in bearish zone but the levels around 10950-11000 assumes a lot of significance from near term perspective. Markets are oversold and technically due for a good bounce and this area could be a good zone from Nifty can bounce back in near term. Todays sharp pull back from 11400 levels is looking like a panic selloff and sometimes (usually often) we see market forming a base around the sell off zone. Now we are not saying that bottom is done but all we are saying is that market never moves in one direction and if a bounce back is due then this zone ( around 11k) is a good area for that hence some low qty buy can be initiated at these levels.

One interesting observation is that market is following a 10-11 days time cycle for rallies and drops. Previous drop from 12400 levels to 11600 had consumed around 11 days. Now today , the fall which started from 12250 levels has consumed 11 days. if one looks at Fibonacci levels then the current fall is around 150% level of the previous fall.

Nifty

In Nutshell, we need to see if market is taking support at 11100 levels and if it does then we can see another move towards 11400 levels and if Nifty moves above 11450-500 levels and covers the entire gap that will be first indication that probably some sort of bottom is in the place. Till we see that, the trend remains on the downside but risky and smart traders can try and buy around 11K-11100 zone ( todays low) if they get an opportunity with a SL of around 10940.

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Nifty Analysis: Outlook and Trend for 2nd Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11950)

Black Friday : Nifty  had yet another disastrous session. It opened with a huge gap down at 11350 levels and drifted towards 11200 levels as the trading progressed. It closed with a whopping loss of 400+ points.

We have been saying since last few days ( since Monday after Nifty opened with the first gap down at 11950 levels) that market near term trend has turned down and its likely that we see a fall from here. Infact we had advised all our subscribers that 11200 is the logical target for this downmove which was sort of achieved today.Nifty had seen back to back 'island reversal' pattern this week ( jsut one island reversal pattern is enough to destroy markets and here we had 2 so the fall we are seeing is not surprising).

Now it doesnt take a genius to figure out that markets are in the grip of a severe bearish grip having said this, markets are falling non stop since Monday and have fallen almost 900 points in 5 days and markets dont move in just one direction for too long so its likely that we see some sort of bounce coming in next few days. Going forward the gap are we witnessed today (11350-11550) assumes a lot of significance. If Nifty wants to find its feet it must conquer this gap in next few trading session. If we see some consolidation around current levels and then a move back above this gap then that would be the first sign of markets getting stabilised.

For now Nifty has to stop falling, once that is achieved then only we can hope or expect markets to move up again. short term and medium term have been completely destroyed but long term trend of market is still intact however one can not trade as per long term charts and trading has to be done basis short term/medium term view. As long as short term and medium term is down we dont recommend going long ( doesnt matter how lucrative the prices seems).

In summary, we need to observe if Nifty is holding levels around 11100-11200 and then if it manages to move back above 11500 levels. On the other hand, continuous weakness below 11100 and 11K levels could be extremely serious and could even threaten the long term pattern

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Nifty Analysis: Outlook and Trend for 27th Feb 2020

Medium Term Trend: ↓Down (Changes to up above 12250)

Weakness Continues: Nifty opened yet again with a gap down but maintained the opening lows for most part of the day however it gave up in the end and closed near the lowest point at 11680 down 120 points.

In last update we had clearly mentioned that the way Market has fallen, and the way charts are shaping up its clear that the near term trend of the market has shifted to down and we changed the medium term indicator to 'Down' even when the reversal point of 11750-11800 was not breached. If anyone was in doubt about it on Monday ( many traders were thinking of it as a one day fall and expecting mkt to bounce back again after one bad day) then its been put to rest now. Nifty has posted 2 more consecutive losses and shown beyond a doubt that its in strong Bear grip.

Monday fall was also significant since it witnessed an 'island reversal' pattern ( explained in previous post). Now today again we got to see another 'island reversal' pattern. After Budget day's huge fall, Nifty had opened gap up at 11850 levels so there was a gap standng at 11750-11800 levels and today Nifty opened below it ( though it filled it intraday) but still the closing is much below it so it can have further bearish implications.

Since Monday, the markets have turned oversold on short term charts hence we keep seeing small bounce backs (though only intraday) but nothing meaningful as of now. Going forward it will be interesting to see if Nifty hold the previous low (11600). Holding 11600 could give some consolation to the bulls but if Nifty goes and drop below  11600 then we will have lower low and lower high type of scenario set in charts and that never is a positive sign.

In Nutshell, when markets opened with a gap of 150+ points on Monday it became clear that trend has been changed and there was no reason to carry with long positions. Now Nifty has further fallen around 300 points from that gap down area.  In near term the weakness is likely to continue and Nifty needs to grind , consolidate and spend some time at lower levels before it start moving its way up again. Any attempted V shaped recovery can meet same fate as the last one did. For now markets are down and one should be looking to sell at rise and hold on to the shorts. Nifty needs to move above 11850 levels before we start talking about bottoms.

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Nifty Analysis: Outlook and Trend for 25th Feb 2020

Medium Term Trend: ↓Down (Changes to up above 12250)

Black Monday: Nifty opened with a huge gap down of 130 points at 11950 levels. It consolidated a bit around 11950 levels and gave up during last couple of hours of trading to close at 11830. Down by whopping 250 points 

Todays fall was important from many perspective & it changes quite a few things. It has also conclusively settled things in the favour of bears hence we have changed the overall trend to 'down' with a reversal pegged at 12250 levels.

Originally, the bounce which Nifty generated after the budget day fall, was a V shaped recovery and once it crossed above 12150 levels, was considered a start of a fresh up leg. The fall which followed from 12250 to 11900 levels was previously seen as a corrective move (complex correction) post which nifty was supposed to open a fresh move on the upside. However we had also mentioned the possibility of entire upmove from 11600 levels forming as 'extracting triangle' . Bearish extracting triangle is a pattern where falls keep getting bigger and bigger and rallies keep getting shorter and shorter. Faster completion of last leg ( i.e, E leg confirms the completion of extracting triangle). Extracting triangles forms rarely and are indicative of distribution. Markets are initially pushed higher which is used by smart money to offload their holding as a result each subsequent rise is smaller than previous rise and eventually when the distribution is complete, markets reverses and start falling. More about extracting triangles can be read here Extracting Triangles

The other important thing which should be observed is that Nifty had formed a 'gap-up' area near 12010-12040 zone couple of days back which got filled today and interestingly enough through a 'gap-down' move only. Such patterns are called 'island reversal' and in this case its an bearish island reversal.

Nifty

Now because of these 2 developments we have been forced to change our medium term trend signal to Down ( even though the previous reversal area of 11750 is yet to be tested).

Going forward nifty is likely to continue the downmove ( which is still a correction only on a larger time frame). Now this downmove can form a simple zigzag A-B-C like pattern ( currently we are assuming larger B leg got over as abcde extracting triangler and larger C leg has started) or a triangle ( ABCDE). A triangle can further be contracting or descending ( wedge). If its a contracting, then Nifty is likely to protect the lows of 11600 and the last 2 down legs ( i.e C & E) will form above 11600 only. However if its a descending triangle then its likely to hit new lows below 11600. Will have to keep an eye and observe how the pattern is shaping up  in next few trading sessions.

So in nutshell, we were expecting Nifty to complete a irregular correction around 11900 ( especially after seeing the fierce bounce) and then start a new leg on the upside however todays open ( at 9.15 it became clear) confirmed that Market remains in a correction mode which is now likely to extend (both in terms of price and time) on the downside.Global markets are not in great shape and markets everywhere are tumbling hence expect the weakness to continue for now. Only silver lining we can see for bulls is that markets are a tad oversold on short term charts hence a bounce back is always on cards.

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Nifty Analysis: Outlook and Trend for 24th Feb 2020

Medium Term Trend: ↑UP (Changes to down below 11750)

Rangebound Trading: Nifty consolidted its position today and traded around 12120 levels for most part of the day. It did try to cross above 12150 intraday but failed and dropped below 12100 levels just before close. It closed at 12080 down 45 points.

In last 2 days Nifty has seen a rise of around 250 points (11900 to 12150) so a little bit of consolidation is expected and is healthy at these levels. Yesterday we did mention about the possibility of Nifty completing a 'complex correction' and starting a new trend on the upside. We had also mentioned that the entire move from the lows of 11600 is developing like a bearish "extracting triangle".

For bullish options to work out, Nifty should continue the uptrend and make a move above 11240-11250 levels soon and for bearish options to materialise, nifty needs to fill the gap which stand at 12000-12040 levels and goes on to break below 11900 levels ( Tuesdays low) in next couple of trading sessions itself. More time  Nifty spend in consolidation above 12K levels, more it  goes in favour of Bulls.

So in nutshell, Nifty remains in uptrend and we need to observe if Nifty manages to add more gains and manages to make a move above 12250 levels in coming trading sessions. If that materialise, then bulls will further reaffirms its position on the other hand if 12000-12040 levels is breached then Nifty is likely target to 11900 once again and its break could bring bearish scenario in picture once again. For now we have to believe that market is in uptrend (with a eye on 12K-12040 levels ofcourse).

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Nifty Analysis: Outlook and Trend for 20th Feb 2020

Medium Term Trend: ↑UP (Changes to down below 11750)

Nifty Marches: Nifty opened strong above 12K and after flirting with 12100 levels, it managed to make a close above it & added about 140 points.

Nifty had seen a big cut on Monday & Tuesday where it went on to test 11900 levels but today it erased all the losses for current week and now trading above the closing price of last week( and more importantly 12100 levels).

In last post we had mentioned that 12100-12150 is the support area for nifty and its possible that markets are creating an inverted H&S pattern which carries bullish implications. Nifty couldn't manage to hold 12100 levels and thus negated the H&S pattern that did change the trend for very short time but overall there was no change (from medium terms perspective) and Nifty remained in bullish trend. Nifty broke below12100 levels on monday which brought further weakness and made bears go active again and they managed to pushed Nifty all the way back to 11900 but like we mentioned earlier, Nifty continued to remain in bullish zone and attracted buying at lower levels which has put nifty back again above 12100 levels today.

Now lets step back a little and see how things are developing. Nifty rose all the way from 11600 to 12150 in about 4 days and what we saw after that was a (possible) complex correction. Now thing about complex corrections is, when in progress, they are nearly impossible to identify hence impossible to trade. However good thing is that when they get over they usually offer some good trading opportunity however traders are already frustrated seeing markets going up and down in a complex correction so they do not risk a new trade when a new trend starts ( fearing reversal yet again).

In complex corrections markets make new high and break previous bottom yet it remains a correction. Here nifty dropped from 12150 levels to 12000 ( 170 points) then from 12K levels Nifty made a new dash towards 12240 levels and again dropped below 12K ( which was the previous low). Now interesting thing to note here is that Niftys new high at 12240 (last week) was ~90-100 points higher than previous high ( 12150) and when it dropped to 11900 then its low (11900 yesterday)  was again 90-100 points lower than previous low (12000). So both the b & c leg of this correction seems to be perfectly synchronised or proportioned. Nifty action during last few days might seem chaotic but there is an order in chaos if once notices carefully.

Nifty

While we believe its a complex correction, there is also a chance that the entire move from 11600 is developing like a bearish extracting triangle ( which has 5 legs) and nifty is currently forming leg 5. We need a strong move above 12170-12200 to cance the probability of Nifty making extracting triangle.

So just to summarise, inspite of last 2 days maniac fall, Nifty still remains in upmove and the fact that it has closed above 12100 yet again, makes this a strong possibility. For further sign of confirmation, Nifty needs to move above 12175 & 12250 levels in next few trading sessions.On the downside the gap area between 12010-12050 is likely to offer strong support and if Nifty makes a close below 12K levels, then again the entire structure needs to be revisted.

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Nifty Analysis: Outlook and Trend for 14th Feb 2020

Medium Term Trend: ↑UP (Changes to down below 11750)

Nifty Consolidates: Nifty opened below 12200 levels today and traded around 12150 levels for most part of the day today. It threatened to move down below 12150 many times but didnt and finally closed at 12175 levels down 25 points.

Yesterday we had mentioned that overall trend of the Nifty has changed to 'Up' now and the market is likely to find support at 12100-12150 zone ( which was the previous resistance zone). Today market did find support at 12150 zone and the level held through out the day (inspite of the fact that dow future was trading almost 200 points down). We had also mentioned about the possibility of Nifty making an inverted H&S pattern which seems to have broken on the upside and today markets came down to test the neckline of the same.

We now need to observe if the lows of todays are protected tomorrow as well and markets use this level ( 12150) as a base to propel itself towards higher level. Holding 12150 and crossing above 12250 will further confirm that we are on right track. However if we see weakness tomorrow or next few trading session and market goes on to break below 12100 levels then probably we will have to start being cautious again.

In summary, no major update today and the views of yesterday still hold. If market hold 12100-12150 and goes on to break above 12250  then all time highs are likely to be tested again and if 12100-12150 doesn't hold then ? Well..will cross that bridge when we get there.

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