Medium Term Trend: ☝UP (Changes to Down below 13900)
Nifty @ 14556 : Flat Close
In previous posts we have been discussing that a move above 14300 could propel Nifty towards 14700 levels. Today Nifty has almost touched that level and moved down a little. Going forward, we continue to see technicals in the overbought/cautious zone. For ex the daily RSI has closed at 80+ levels today again. In previous month too we had seen this (around 17/18 Dec) and Nifty had given a vicious correction of 600+ points on very next day but the correction was small time wise and lasted for just one day.
Historically we have seen such scenario 2-3 times in past years (details were already explained in this post http://niftywaveindia.blogspot.com/2020/12/nifty-tomorrow-prediction-outlook-and_18.html) and each time it happened we saw some serious correction. But this is a different market altogether & is in a strong bullish trend hence it may or may not play out in a same fashion this time around.
Also, historically speaking, Jan/Feb is the month where we can see some kind of top formation. The famous top of 2008 was also formed in Jan only. However this market is totally different from what we had in 2008 (that was excessively leveraged market and today don't think its leveraged at all.
So the trend remains up and up only but one should continue to be cautious (and should not indulge in overtrade). Correction is part and parcel of the game and can come at anytime and no one can predict its timing. One thing is for sure is that it wont come when all are expecting it but will come only when its least expected.
One very simple yet important thing I can teach you is that never anticipate or preempt the start and end of any trending move. In a bull run be prepared for a correction all the time but don't anticipate it and initiate a trade hoping for a correction to begin. Always trade on 'what is' and not 'what is likely to be'. Just because market has run up 1000 point is no reason to short it similarly just because market has fallen 1000 points is no reason to buy it. Always trade on the side of main trend else market will rob you of your 100% capital in no time.
Now for short term perspective, todays low around 14475-500 becomes important and if market sustains below these level tomorrow then we can see some weakness and Nifty can fall towards 14225-14250 levels (which is a key support from short term perspective). Below 14200 next support is 13900 levels and if that also breaks then it could mean the start of a larger degree correction. On the upside, a successful move above todays high could mean 15K+ levels is on the cards.
Happy Trading
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