Nifty Outlook and Trend for 14th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty opened positively today but quickly drifted into negative territory however buying support pushed it back up again and it made a high of 11350 before closing at 11340 levels ( up 40 points).

Nifty continued its upward journey & it remains overbought & negative divergence continues on major indicators. Today it appeared as if markets have got tired now, It has been moving non stop in one direction and some bit of correction is definitely overdue now. Level of 11400 in Nifty ( Sensex 37860) was a possibility and today Nifty almost touched it ( just fell short by few points).

We have been saying though price movements is consistently moving up, there are plenty of indicators warning caution at current levels. Today the daily RSI touched 74, last time it touched 74 was way back in Aug 2018 ( when Nifty was trading at 11750). Now if Nifty moves further from here, RSI will make a new high while Nifty would still be below Aug highs, now that is a very powerful negative divergence.Not saying its a confirmation of bearish trend (negative divergences can continue for long even for months) but just highlighting that its an important point and must be kept in consideration.

Coming back to this entire rise from 10K levels , today was the 94th day & we had mentioned in our previous posts that corrective moves usually last for 250-261.8% of previous moves. That gives us 95-99 days. Now if this entire corrective moves beyond 99 days that means it can extend till 300% (which is not very commonly seen and is rare but a possibility). 300% gives us 114 days. So this entire corrective move can further stretch for 1-3 weeks more (if not completed in next 1-4 days).

Another point to reckon is that in corrective moves, sometimes the last leg mimics the first leg. From the lows of 10K Nifty had risen to 10750 levels in 15 trading sessions (In Oct/Nov). That means ~750 points in 15 trading sessions & that had kick started this entire upmove/corrective leg. Now from the lows of 10600 (in Feb) Nifty has exactly risen 750 points ( 10600-11350 today) and that too exactly in 15 days. So we have one more strong indicator here but again we are not saying that its a confirmation signal for a trend reversal, all we are saying is that there are too many indicators pointing that this could be a critical area ( both in terms of price and time). So be watchful.

Happy Trading!


 

Nifty Outlook and Trend for 13th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty posted an exact replica of yesterdays trade today. It opened +ve with a gap & kept on moving higher throughout the day. The rise & gain of last 2 days have perfectly been in a sync.

Last two days buying frenzy has pushed markets into overbought zone though markets can remain overbought for long still a little bit of cooling off is expected soon now ( even if not a selloff). Today was the 3rd consecutive gap up by markets. In one of our previous post we had explained the concept of 'exhaustion gap'. After 2-3 consecutive gaps the next gap can be an 'exhaustion gap' meaning it gets filled up. So if market again opens with a gap, then one needs to be careful as usually all such gaps are filled intraday/next day & sometimes the move can be strong and it fills all previous gaps( first gap in this scenario occurred at 11K levels). Continuous running gaps are indicative of a bullish behavior where buyers feel they have been left out and they just go all out scrambling to buy. This behavior is also called 'panic buying' ( opposite of panic selling where everyone just offload their holding fearing capitulation in markets).

Last  2-3 weeks Nifty movement is looking like a start of a new trend however there are couple of things which are suggesting that it may not be a new trend. Firstly It is too slow and secondly its coming off too late. Bank Nifty posted a new lifetime high today but broader market is lagging bank Nifty.

For now technically, it remains a corrective move and like we mentioned yesterday, today was 93th day of this corrective move (previous move was 38 days) so we have spent almost 250% time. Next 5-6 trading session ( middle of next week) would complete 261% hence warning caution at these levels. Nifty may run from here every things possible but it is also possible that this is the last leg on the upside which might trap traders on the wrong foot.

Nifty Outlook and Trend for 12th Mar 2019

Near Term Trend: ↑UP

Market update: Nifty Opened sharply up at 10780 levels and kept moving higher and higher and closed almost at the highest point of day at 11170 levels up 135 points.

Now since Nifty has crossed previous high with so much momentum and force, we have changed the near term to up. However please keep in mind that overall this leg remains a corrective rise and though it might stretch for a bit, it can finish suddenly without warning so inspite of markets breaking above previous highs, no fresh longs are advised at cmp.

We had mentioned yesterday Nifty needs to break below 10780 levels in next two days to confirm start of a new leg on the downside. Markets on the other hand have made a new high today.Todays high assumes lots of significance as 11171 was the previous high for Nifty ( before it was taken out and Nifty posted a new of 11750).

Inspite of the fact that markets made a new high today,there are many things which doesnot seem right at this stage. For starters there are plenty of negative divergences to be seen all around, secondly the volumes seems to be missing also todays rise seems to be news based ( opinion polls predicting BJP win) and lastly markets have turned overbought now.

It might be possible that this is part of pre election rally and Nifty sees higher levels from here and its also possible that its a false breakout ( in which case it should reverse soon).

Technically speaking, this pull back from lows of 10600 remains a ABC pull back but instead of flat its turning out to be zig-zag move.

Another important thing to note is that the fall from 11750 to 10K levels had taken 38 days and now mkts have already consumed around 92 days ( which is almost 250% of total time) and is still sitting below that high (infact its barely retraced 61.8% of previous fall). Now as per rules of Elliott wave/Neo wave, the corrective leg can consume upto 300% of time ( but those are rare) usually markets consumes 150-161.8% to 250-261.8% of previous move.

250%  gives us 95 days & 261.8% gives us 99 days. We have consumed 92-93 days already hence a note of caution, these strong rallies we are seeing are coming too late and next few trading sessions could be really crucial. Having said this, until Nifty takes out 10880-10900 levels trend will not change.

Happy Trading!




                 
 

Nifty Outlook and Trend for 11th Mar 2019

Near Term Trend: ↓ Down

Market update: Nifty opened with a small gap of ~20 points and kept trading in a small range before closing 20 points down at 11035 levels.

Today Asian markets opened weak however nifty once again bucked the trend and closed almost flat when most markets closed 1-2% down.

Nifty once again posted a 'Doji' candle 3rd day in a row. Like we said yesterday, this indecisiveness is warning caution specially considering that markets are above 11K levels.Nifty made a lower low and lower high today but we need a very sharp fall from these levels to confirm a new leg has started on the downside. Nifty needs to break below 10780 in next three days (preferably 2) to give a first signal that its ready to start a new leg on the downside. On the other hand if Nifty trades lacklusture ( avoid falling too much) for next couple of days then probably it can go and test 11100 levels once again too.

Technically the entire move we have been seeing since last 3 months ( from the lows of 10K) remains a complex corrective. Its developing as a double corrective where first corrective got over as 7 legged diametric and second corrective is now seems to be moving as ABC flat.Previously it seemed that the second corrective is developing as triangle however the implications for both the patterns are more or less same.

In nutshell, markets are at a very critical juncture and there is a high probability that this sideway trading or consolidation we are witnessing is pretty close to finishing ( it could just be a matter of days now). One needs to be cautious and carefully observe the market movement for next few days.

Happy Trading!!

Nifty Outlook and Trend for 8th Mar 2019

Near Term Trend: ↓ Down

Market update: Nifty Opened up at 11080 levels however couldn't sustain above it and traded below it for most part of the day. It made a late dash towards the close but failed to close above it and in the process closed flat.

Today Nifty made a second consecutive Doji candle (Doji signifies indecisiveness) and after a strong bullish candle, 2 consecutive doji candles are warning caution at current levels.

Nifty OI remains at records low and today it shed even more OI ( now sitting at 1.45 crores). We had mentioned yesterday that move from 10585 (last 10 days) is clearly looking a corrective move ( this is evident from the fact that even after 10 days Nifty has failed to retrace the previous move which had taken only 8 days). Now point to note here is that even the previous move was a corrective move (from 11118 to 10585) as well.

Now coming back to current 10 days move (from lows of 10585) if you analyse it carefully you can see its a ABC move. A leg started from 10585 and went on to hit 10880 levels in 4 days, after which we had B leg which was an irregular correction and went up to 10940 and ended at 10785(this was a major point of confusion and am sure must have confused lots of traders). Now we have C leg which started from 10785 and made a high of 11088 today (it has also taken 4 days).

So here we have:

 A leg = ~300 points (10585 to 10880) 4 days
 C leg = ~300 points  (10785 to 11088) 4 days ( today was the 4th day)

Both legs are exactly similar price wise and time wise & If this is right then we should see a sharp move down from here but keep in mind a new trend on the downside will begin only when Nifty break below 10785 in next 4 days ( ideally in 3 days by coming Tuesday). If Nifty falls from here but fails to take out 10780 levels then that would mean corrective leg on the upside will resume. In case Nifty doesn't fall and make a new High then most probably this ABC correction is taking some other shape ( other than a common zigzag which we are assuming right now).

So in nutshell Keep a tight watch on 10780, if it gets broken by Tuesday then the chances of this entire consolidation (which we are witnessing since last 3 months) getting over and Nifty starting a new leg on the downside will increase manifolds.

Happy Trading! 

Nifty Outlook and Trend for 7th Mar 2019

Near Term Trend: ↓ Down

Market update: Nifty Opened with a slight gap and maintained the gap through out the day and closed strongly at 11050 levels up 60 points.

Nifty has given a good follow up above yesterdays huge rally however today the highest point was hit in first 30 mins of trading and entire day market traded below that only ( it was breached momentarily only in last few minutes) in the process Nifty made a doji like candle. The entire rise from 10585 levels is lacking impulse and thus remains a pullback or corrective move. All corrective moves ends sooner or later and the move which follows after that is usually a trending move.

Like we mentioned yesterday, today was the 10th day of this pullback and we are still sitting below previous high (11118) which is not giving enough confidence about the sustainability of this upmove. Now this may still stretch a bit more from here but its not going to be easy.

Pull back from 10585 lows is clearly looking like an A-B-C corrective move which is in its last leg ( C). Today C has almost achieved equality with A leg price wise as well as time wise.C leg can stretch a bit more and become bigger than A leg  but considering the fact that it remains a part of  bigger triangle/corrective it should not stretch much beyond here.

We have been saying that overall corrective and range bound markets we have been seeing is about to end and markets are likely to move in a strong trend soon. Now this is evident from the fact that open interest position in Nifty future is at record low. Total OI is sitting at less than 1.5crore ( usual average is 2.5-3 crore so its almost 50% of that). Now this clearly explains that most traders are out of market. Last 2-3 months have been a difficult month for traders and it seems most are tired of waiting for a breakout or getting stopped out in wild swings. With such low OI positions, markets are trading very light and Nifty can move strongly (in either direction).


Happy Trading!!

Nifty Outlook and Trend for 6th Mar 2019

Near Term Trend: ↓ Down

Market update: Nifty again opened weak around 10820 levels but immediately reversed and kept moving in one strong trend for entire day and closed at 10987 levels up 130 points.

Today was a very strong day and easily the best day since Nifty hit 10585 levels. However the only thing is that it has come too late. Today was the 9th day of rise from the low of 10585 and Nifty has managed to retrace only 75% in more than 100% of time ( Sensex is lagging behind even more and is currently sitting at 61.8% retracement level). The fall we had seen from 11118 levels was a slow one and failed to retrace previous rise by 100% in faster time. Now the rally or pullback we are seeing is doing the same thing and infact is even slower. So inspite of a strong upmove today, market is not giving a confidence ( not yet) that it has put the worst behind it.

However it doesn't mean that we can not see further rise from here, todays upmove was pretty strong and carried a lot of momentum so its possible that momentum is spilled over to next few days. Good thing about markets is the strong volume and the broad contribution. In last few days small cap and midcaps have started contributing to Nifty (it may be noted that all these stocks were continuously being hammered since last few months). Most indicators have turned into buy zone and PCR too remains in favour of bulls.

One interesting thing to note is that previous rally from 10583 to 11118 had taken 7 days, the fall witnessed from 11118 to 10585 took 8 days and now this pull back from 10585 levels has taken 9 days. So each move is getting bigger time wise yet remains smaller price wise which is giving contradicting signals.In Nov 2018, Nifty was at 10900 levels now after 4 months its still sitting at same level. This 'nothing' markets cannot continue for long should end sooner or later.

In nutshell, inspite of a strong thrust today, Nifty remains weak for now however strength above todays high followed by a close above 11020 levels tomorrow would most probably mean that markets may test higher level/new high once again.

Happy Trading!!