Nifty Analysis: Outlook and Trend for12th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11095)

Halt in Carnage: After falling for more than 800 points in last 2 days, Nifty took a breather and prevented further damage. Though at one stage it was threatening to go down once again but it managed to move back in green to close flat near 10450.

Though Nifty failed to put up a sizeable rally today but many must be taking comfort from the fact that it didnt fall any further. Global markets were cautiously positive and did manage to cut some of the losses of last couple of days (but not nifty).

Corrections can broadly be divided under 3 Categories:
1. Which is common and seen frequently ( 1-3 times  a year).
2- Not so frequent and cause massive damage (once in 3-5 years)
3-and  major ones which totally destroys market but seen only once in 10-15 years ( like 2008/1999)

Once nifty broke below 11K levels, it turned into something more than a normal correction. Weekly RSI is sitting at 30 which is extremely low and like we mentioned in previous post, this level is seen only twice in last 12 years (2012 & 2016). In case market decides to end this correction as type 2 then there is a possibility that the worst is over ( though some more weakness cannot be ruled out and its possible that weekly RSI can remain stable or even go up while market go down some more but that could be a sign of strength and not weakness).

Continuous weakness from here could be indicative of something major and exceptional, in such a scenario we can fall all the way down to 9k-9500 levels ( that would push RSI to 20 like we saw in 2008).

For now we need to observe if market is trying to finish the correction around these levels and to do that it must fill the last gap down ( 4th consecutive gap) which is sitting at 10700-10850 in next few trading session. Trading below this gapzone could give more power and further encouragement to bears and could cause more weakness.  Closing above this gap could be the first sign that bulls are returning. In most market conditions 4th consecutive gap usually gets filled up in subsequent trading sessions ( but what we are witnessing nowadays is not normal hence the word of caution).

In Nutshell, the overall trend continues to be down and need to see if Nifty tries to fill (and make a close above) the gap area at 10700-10850 levels, if it does then some strength can be expected back in the market , failure to fill this gap and continuous trade below this zone would be negative and could push markets down again back to 10200.

Happy Trading!

Nifty Analysis: Outlook and Trend for11th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11095)

Bloodbath continues: Nifty opened (yet again) with a huge gapdow and kept on moving downwards. It hit a low of 10295 before moving back above 10400 levels.There was absolute carnage all around & it closed with a massive loss of 540 points.

Nifty is getting weaker day by day and though there were indicators that we could see some stability around 11K levels (and we had also said that as long as levels around 11K are held, there are chances that the fall is arrested around current levels). However another gapdown today made it clear that markets are not following any technical indicator as of now and this fall is turning into something which is not common or is of rare nature..

In last post we had shown nifty chart with RSI to point out that how RSI has come down to a level ( which has been generally seen only twice a year in last 5-6 years). Now today weekly RSI has gone below 30, which was last seen in 2018 (when nifty hit 9950) and before that in 2016 ( when nifty hit a bottom of 7k) and before that it was in 2012 ( when nifty was at 5K levels). Only time Weekly RSI for Nifty has fallen significantly below 30 was way back in 2008 ( 12 years back) that time RSI had dropped to 20 and Nifty had seen a low of 2K.

Now if this was a normal correction it should have stopped around 11K levels ( which it didnt) but even if its a rare correction or a rare fall ( which happens once in 2-3 years) then it likely to hold around the levels of 11200-11300 and not fall much beyond these levels.

Now lets consider the other scenario where this fall turns into 'extremely rare' (which happens once in 10-15 years like that of 2008), then weekly RSI can drop to 20 ( which means Nifty can go down as low as 9500).

Its upto market to decide what category of correction/fall it wants to achieve, depending on that either we fall another 1000 points towards 9500 ( going by current speed it can be achieved in 1-2 trading sessions) or complete it around todays low. There is no point predicting the next target cause when markets are in such mood generally no level is respected and no technicals are followed.

Having said this, would like to make one correction. In last post we had also mentioned about the possibility of exhaustion gap and had called the gap on friday , 4th gapdown in a row. looking at charts again it was only a 3rd gap down ( the second gap down around 10750 on 26th was filled intraday so doesn't qualify). Technically, todays gap was the fourth consecutive gape and generally the 4th consective gap is filled in subsequent trading sessions ( next 2-3) but the point is these days markets are not following 'general' rule. But still we need to observe and see if markets tries to fill this gap and move above 11800 levels in coming sesssions.If that happens then may be ( just may be) we can hope that bottom is done for time being.


Happy Trading!

Nifty Analysis: Outlook and Trend for 9th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11550)

Nifty Meltdown: Nifty went under a hammer today ( owing to Yes bank fiasco and weak global markets) and opened more than 400 points down. It managed to cut its losses  to less than 300 points to close around 11K levels.

Yesterday we had mentioned that 11100-11380 range is important from near term perspective. Now the logical target below 11100 was around 11800 .Which was near to the opening levels hence it becoming more & more difficult to trade ( thanks to ever rising volatility).

Now the overall trend of the remains down no doubts about it but at the same time its possible that we do try to make some sort of bottom around these levels. We have been saying so since last few days and today (even after a gigantic fall) our views have not changed. There are couple of reasons why we feel this area is important ( 200-300 point here and there is no big deal especially considering the volatility).The key reason is that this zone has always supported markets in last 5-6 years. Lets see the chart below

Nifty Weekly Chart

Whenever weekly RSI has fallen to 40 or below, market has always made an important bottom ( which is not breached in months to come) and again we are trading around same levels. Its only 1-2 times in a year that weekly RSI drops to around 40

 Now unless something material is changing which is impacting the long term picture then there are chances that we try to make a bottom here. Agreed we have come down to 11K which is disturbing but its too soon to conclude if everything is finished.

Also, usually in one down-move we see max 4 down-gaps (we have mentioned this fact in many previous updates as well)  and after 3 gaps its highly likely that the 4th gap is filled in next few trading sessions ( and becomes exhaustion gap). Todays gap down was indeed the 4th one and its a classic case of markets going deep in 'oversold' zone'. We need to see if market tries to fill this huge gap ( which stands in 11050-12250 zone). If it happens then again it will be a sign ( a strong one) of markets attempting to form a bottom ( permanent or temporary that will remain to be seen) around these levels.

For now we continue to see it as a normal correction which can finish around current levels. Further weakness from here could be indicative of change that are happening on long term charts. For now there are doubt but not enough evidence that things are changing from long term perspective.

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Nifty Analysis: Outlook and Trend for 6th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11700)

Inverted hammer : Nifty opened around 11300 and inspired by Dow overnight rally, it tried to move up but found resistance in 11380 zone and dropped to 11250 levels in the last hour. It closed flat at 11270.

Today nifty formed a "Inverted hammer" candle (inverted hammer candle has a long upper shadow but small body) which signifies that bulls were not able to sustain the rally and bears managed to push Nifty back towards opening prices. Its an interesting candle since yesterday we had a 'hanging man candle' on the charts which is the exact mirror of "inverted hammer". So what bulls did to bears yesterday was in a way dished out to bulls by bears today. Both these candle could signify trend change for near term hence going forward move aboe 11380 and a move below 11100 could well be a beginning of new trend ( for the short term).

Key thing to note is that now Nifty has started hitting new highs and is protecting the lows of previous day ( i.e, not closing below it). Today was 3rd such day. we had mentioned that it will be good for Nifty if we dont see a sharp V shaped recovery but instead see some consolidation and grinding. Nifty is indeed seen consolidating now around 11200 levels ( which can be positive for near term if it continue to protect some important lows).

Global markets (especially dow) continue to be all over the place with Dow rising 1000 points one day and falling 1000 points the next. Even today right now Dow future is down 500 points as we update this blog. As a trader if you are looking at dow and then deciding your trading strategy then I am afraid its not a best thing to do (One has to look at Nifty charts and then decide which way to trade). Now going forward as we mentioned  11380 and 11100 becomes important I know its a big range but VIX is sitting at 25 hence 250-300 point is not really a big deal in present scenario. Crossing above 11380 could give Nifty a shot at all imp gap zone which is sitting at 11450-11550 however on the downside if 11100 breaks then things could once again turn ugly.

In Nutshell, for now Nifty is trying to make some sort of base around these levels and if it manages to  make a move above 11380 levels then we can see some more bounce in near term but if we start seeing weakness below 11150-11100 zone then there is a strong possibility of Nifty going down and opening another downleg.

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Whatsapp message service will share buy/sell signals in real time basis purely based on algorithm designed by us. Please note there will not be any target area or market view and Buy signal or Sell signal will continue as long as its not cancelled out or reversed. 

Following message will be shared as soon as the signal is generated.

• Nifty enter buy/long position @cmp xxxx - Buy/Long position to be initiated
• Nifty SL @ xxxx  - SL provided for reference
  
• Nifty Buy Exit @ cmp xxxx - Existing long to be exited (but no short position to be entered)
• Nifty enter Sell/short position @ cmp xxxxx : Sell/short position to be initiated
• Nifty Sell Exit @ cmp xxxx : Existing short to be exited ( but no long positions to be entered)
• Nifty book part profits @ cmp xxxx : Book partial profits

Important points:

• All trading positions/signals will be generated with a time frame of 1-7 days (usually)
• All calls will be as per Nifty Spot prices.
• Its possible that sell signal is generated as soon as 'buy exit' is given similarly possible that buy signal is generated as soon as 'sell exit' is given (but its not mandatory)
• There will be no target and no market commentary will be provided, its a purely no noise entry/exit ( based on current market trend) trading game
• SL will be driven by volatility. Higher the volatility, higher the SL So one need to keep that in mind while trading. SL will be modified and revised Sl will be updated in timely manner
• Last 30 mins- confirmation message will be sent that position is carried for next day ( if no message that means position continues)
• There is no guarantee that every trade will be profitable and there could be a string of consecutive loss making trades. If you are not prepared to take loss then you shouldn't trade

 

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Traders should book 50% profit as soon as  Nifty move 100-200 points favourbly from our entry point and continue booking part profit on every rise. Part holding (around 25%) can be held till exit call is given. Exit call can be below entry point if volatility is high.

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Happy Trading!

Nifty Analysis: Outlook and Trend for 4th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11700)

Positive Day : Nifty finally had a day where it managed to protect the lows of previous day and closed almost near the high point. It closed at 11300 up 170 points.

Nifty had been continuously falling since last 9-10 days making new low everyday however trend reversed today and Nifty managed to regain some of the points it had lost recently. Yesterday we had clearly mentioned that Nifty has been falling since last 10 days and the zone around 11K-11100 is a good support zone for Nifty and its likely that market try to make some sort of base around these levels hence a bounce back is likely and expected from these levels. Today we got exactly that and Nifty put up a good rally of ~200 points. We had even suggested a buy near this levels and though we didnt get any opportunity today, there was a good opportunity available yesterday.

Going forward we need to see if Nifty manages to make a move up above 11400-11450 levels (yesterdays high). Trading above todays high and then ultimately filling the gapdown area of 11450-550 will be very positive for Nifty however its not going to be easy. For overall health of the market its important that nifty grind and consolidate for some time before attempting a move on the upside. If Nifty fails to take out 11400 then we are again likely to drop towards 11K and below that 10600 levels, all depends on how nifty trades in next few days. 

In Nutshell though the overall trend of Nifty remains down, there is a likely hood that the bounce extends further form here ( time wise and price wise). However if Nifty fails to cross above 11400 levels then there is a chance of nifty revisiting 11K levels once again and if 11k breaks then its heading straight towards 10600. From trading perspective positional shorts should not hold their position above 11400 and for those who entered longs entered around 11100 part/full profit booking is recommended at current levels. VIX is trading around 25 which is pretty high ( from Indias perspective).

Happy Trading!

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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.

Happy Trading!

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