Nifty Analysis: Outlook and Trend for 18th May 2020

Medium Term Trend: ↓Down (Changes to up above 9800)

Flat Day: Nifty dropped to 9050 levels but held on to it and managed to close flat at 9140 levels.

We had mentioned in yesterdays post that as long as Nifty defends 8950-9000 support we can still hope for a fresh bull run. Defending this support zone and then filling the gap down area at 9250-9350 could push Nifty once again towards 9500 and 9800 levels.Today Nifty did test 9050 levels and moved up a little so its possible that support is tested already or at the same time one more fall towards 8950-9000 level can not be ruled out.

On daily charts, Nifty formed a hammer pattern which is a bullish pattern. Holding on todays high and then closing the gap area at 9250-9300 will bring bulls back in the game. Its possible that markets have set their eyes at a higher target ( 10K+) and all this choppy and sideways movement is just a ploy to get weak traders out of market . The fall of last 2-3 days we are seeing (after the economic package was announced) is also pointing towards this scenario only.

Keep in mind the package announced is indeed positive for the markets but sometimes markets do not react to positive news immediately but they take their time and create a perception that its not important. They fall a little and short term traders start moving out and once the euphoria around the news dies, then only market start moving up. I am not saying this is how its happening presently but a strong possibility exists.

If you see the rise from 8950 levels (21Apr) to 9870 (30th Apr) had taken 7 trading sessions and since then (in May series) Nifty has taken 10 days already and its still trading above 8950 level. Inspite of consuming more time the fall is not able to retrace 100% of the rise. This is also suggesting that probably the entire fall from 9800 levels is just a corrective move.

Eventually we expect 9300-9500 levels to give way but the timing is something market only decide. It might decide to spend some more time at current levels or it might decide to fall little more from here but ultimately it should move up.

Overall the trend continues to be down for now and any larger upmove is expected only once Nifty crosses above 9800. At the same time  its likely that major portion of the correction already got over at 8000-8500 levels and we do not see more correction ( price wise) but time wise correction can take place (and is happening actually). Since last one month, markets are trading roughly at the same level.

Moving into next week we need to see if 8950-9000 level holds or give up and if holds then whether markets are able to fill the gap down area  of 9250-9350 zone. That will give us further insights.

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Nifty Analysis: Outlook and Trend for 15th May 2020

Medium Term Trend: ↓Down (Changes to up above 9800)

Nifty Plunges: Nifty opened with a gap down and broke below 9200 levels to close at 9150 levels with a massive loss of almost 250 points.

Nifty once again opened with a gap down and it assumes lot of significance since yesterday opening was with  gapup. With todays gapdown Nifty has posted yet another bearish "island reversal" pattern on the charts. The last Island pattern (9850-9500) which formed on 1st May still stands and today markets have formed yet another bearish Island pattern. It can have serious implications if its not filled in next few trading sessions. So it will be interesting to see how markets behaves from here. its possible that we see markets taking big enough swing from here.

In Last post we had mentioned that markets are proabbly looking good for another upmove. Markets did move from 9200 to 9550 levels but it hapenned in a gapup move (on the back of economic package announced). Even though markets gave up some of the gains it had closed in +ve territory yesterday and gapup stayed intact so a further push towards 9800 levels was a real possibility. However it seems too much of positive sentiments or expectations on the street gave smart money an incentive to offload some of the holding and do some profit booking/selling.

Formation of another bearish island reversal pattern today is a matter of great worry for the bulls and its important for them to defend 8950-9000 levels. Currently this level is standing there as a strong support and must not be breached. Breaching 9k will further give strength to the bearish structure that is being formed.

In Nutshell , we need bulls to defend 8950-9000 levels and then fill the gap which formed today at 9275-9350 levels. If that happens we can hope for a fresh run towards 9500-9800 levels ( like we have been mentioning in previous posts we expect 9300-9400 resistance to break ultimately). It is possible that fall today is just a move by markets to shake-off weak/small traders who entered markets yesterday just because of positive newsflow. But we will have to wait for few more trading sessions to confirm that. If the gap at 9250-9350 gets filled then we can expect the markets to fill the second gap (9550-9850) as well but before that its really important to protect 8950-9000 levels.

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Nifty Analysis: Outlook and Trend for 13th May 2020

Medium Term Trend: ↓Down (Changes to up above 9800)

Pull back from 9000 levels: Nifty dropped for almost 200 points in the morning session to 9k levels but pulled smartly by the end to just close around 9200 levels down 40 odd points.

In previous post we had mentioned "its possible that we may see some more sideways trading/consolidation/weakness before we start reclaiming 9500+ levels". 

We had further mentioned that "Nifty's inability to take out 9300-9400 levels or to  fill the bearish 'island reversal gap' has raised a possibility which suggest that the fall which started with a gapdown from 9850 levels is not yet complete.

Today Nifty dropped further towards 9k levels which justifies our stand. We had also mentioned that probably C leg of correction is pending but still we are not seeing too much weakness below 9k levels.

The sharp bounce we have seen today could be an indication that the correction we were expecting (C leg) already got over today. However we need to see some follow up buying above todays high. Nifty has formed a 'hammer' pattern on the daily chart today which could be a positive/bottoming out sign too. Many indicators on short term charts are also beginning to get into positive zone now. You may accuse us of changing our views frequently, but when markets change, we have to change as well. Markets can change in hours/days/week or month no one can predict that. Yesterday we were expecting more correction and we got that today and now the pull back is indicating more upside movement, provided we are able to sustain above 9250 or todays high ( fresh long positions can be entered in such case).

So all in all todays pull back (inspite of a negative close) is promising indeed and if Nifty can manage to cross/move and sustain above 9250 levels tomorrow then there is a chance that the corrective leg which started from 9800 levels got over today and markets bottomed out (for time being) at 9050 levels. It could also mean that a fresh leg on the upside is about to start. On the downside though, if we see weakness below 9100 levels then 9k is likely to be tested again but like I said yesterday, we are not expecting much weakness below 9k levels for now. Surely we can fall a bit more but its not likely to sustain ( this view ofcourse can change as we move ahead).

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Nifty Analysis: Outlook and Trend for 12th May 2020

Medium Term Trend: ↓Down (Changes to up above 9800)
Not sustaining opening highs: Nifty yet again opened strong and yet again surrendered all its gain  intraday(more than 200 points) to close with minor losses. 

This trend of Nifty opening strong and then giving up all gains before close is becoming regular now. In last 6 trading session this has happened 4 or 5 times. Fridays move above 9300 had raised a hope  of markets testing 9500-9600 levels however after seeing todays movement, its possible that we may see some more sideways trading/consolidation/weakness before we start reclaiming 9500+ levels.

Todays movement is crucial as it has formed 'bearish engulfing' pattern on the daily charts also the close has come below Previous days session low. All these things are now raising questions if the consolidation of last 4 trading session was just a corrective move ( B leg) to the fall from 9850 to 9150 (A leg). If this is right then we are likely to see more dip ( C leg probably).

Level around 9300-9400 have become a thorn in the flesh for bulls and they are not being able to cross it inspite of trying many times. Quick jump towards 9800 on expiry day turned futile as markets opened with a huge gapdown the very next day and formed a bearish island reversal pattern on daily charts. Now even after 5-6 days, the gap still stands which is a worry sign for bulls. However keep in mind we have seen such scenario playing out in past as well and each time Nifty managed to move up eventually. But lot of choppiness and sideways movement (especially timewise) is observed before that happens so one needs to be prepared for that.

In Summary, Niftys inability to take out 9300-9400 levels or to  fill the bearish 'island reversal gap' has raised a possibility which suggest that the fall which started with a gapdown from 9850 levels is not yet complete. Today Nifty has formed 'bearish engulfing pattern' which is lending further credibility to this theory. Trading below 9220 levels could Push Nifty towards 9150 and 9000 levels ( however in present scenario we are not expecting Nifty to go down much below 9k levels).

For positive scenario to play out, Nifty must take out 9440 level and then it should go on to fill the gap ( stands at 95000- 9700 levels). Overall pattern still remains down and till the time the gapdown area is not filled, its likely to remain so.

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Nifty Analysis: Outlook and Trend for 08th May 2020

Medium Term Trend: ↓Down (Changes to up above 9800)

Stuck at 9200: Nifty opened weak below 9200 and continue to trade around this level for most part of the day and even closed at 9200 too, down 60 odd points.

Nothing much has changed since our last update and as mentioned in the last post we continue to observe markets for now.  Right now its too early to conclude if markets have opened a fresh leg on the downside at the same time its also confirmed that one wave of up move has also got over at 9800 levels.

Now we need to see if markets open a fresh wave on the upside or signal start of a fresh down move. 9000-9100 zone ( as mentioned in previous post too) continue to be an important zone and it only got tested briefly yesterday when Nifty dropped to 9120 levels so we cannot rule out another move towards 9000-9100 levels.

On the upside, 9400 now has emerged as strong resistance, the Monday gap down area still stand and Nifty has formed an 'island reversal area' at that level. Nifty continue to hover in between 2 critical support and resistance points hence we continue to remain in 'wait and watch' mode for now.

If Nifty manages to move strongly above 9350-9400 levels and Nifty start filling up the gap down area then there is chance of Nifty testing 9800-10K or even higher levels however if 9000-9100 level breaks then there is a strong possibility of Nifty retesting 8500 or lower levels.

OI in market continues to be extremely light which is suggesting that we may not see sustained down move from these levels. But that's just one of the indicator , as always the most crucial indicator is 'price chart' and same is indicating breakout or breakdown only once the levels mentioned above are taken out.

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Nifty Analysis: Outlook and Trend for 05th May 2020

Medium Term Trend: ↓Down (Changes to up above 9800)
Weakness to the fore: Nifty tumbled today to close around 9300 levels, down by a whopping 550 points.

9800 was the keep pivotal area for medium term and we repeatedly had mentioned that Nifty upmove could stretch till 9800 zone but further gains are likely only when this level is successfully crossed. On Thursday Nifty did manage to close above it but failed to give 2 consecutive closes above this level. Since Thursday was expiry day, we needed one more close above 9800 to confirm if the level is actually broken.

Todays sharp fall has put a brake on the recent upmove and raised doubts if market has reversed from here. In our opinion its too early to conclude anything and we need to observe markets a little more to make a sense of whats happening. Nifty can still make another dash towards 9800 levels and if weakness persists then a drop towards 8500-8700 levels is also a possibility from here.

On the downside levels around 9050-9100 assumes lot of significance and could be the last support for bulls. If its broken then chances are markets will fall towards 8500-8700 levels. On the other hand to keep the bullish possibilities open Nifty must fill the 'gapdown' it has formed on daily charts. On Thursday Nifty had opened with a gap up around 9650 levels and today the same gap-up is negated by a 'gapdown' (this is called island reversal pattern). Island reversal pattern is a bearish reversal pattern and has bearish implications (if the gap down area is not filled up in next few trading sessions).

For now the strategy should be to wait and watch!

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