Nifty

#194 Nifty Update: "Dark Cloud" covers Market and 430/688 points rain expected

Rain in winter is unusual but for the markets this COULD happen, so now carry a RAINCOAT i.e., put option to protect you portfolio for new 2-3 months. Last five session has been continuous downside and that was like a slow poison to traders as slide was a bit everyday. Looking at ‘Weekly chart” after today’s close i was shocked to see a strong negative candlestick pattern “Dark Cloud” cover. This pattern suggest a reversal to bullish trend and this time its more relevant as its at a “Clear top”. Indian Economy hasnt improved as expected or as market has discounted. Yesterday IIP were worst than expected at -1.8% while inflation was at the peak at 11.42% (approx). RBI is expected to hike rate in upcoming monetary policy while FED is expected to start tapering of Bond buying which will squeeze some liquidity from the markets. One more reason to see some profit booking around the world and India is the financial year end for US which makes FII liquidate their investment to adjust Balance Sheet. But one good thing for me is that a new high was in December than rather November because History says if a new high is in november than we see a downside for a long term but this was not case for us this year. Earning results would be announced next month and i am expected a little hazzy profits as auto industry hasnt seen sales as expected in diwali festive. Now coming back to technicals, Weekly chart has surely given a negative candlestick pattern while indicators are also bending negative. Nifty took strong support at 5 Week EMA which is also a strong support was next week. On daily chart we may see some short covering as we have seen 5 straight down side. On monthly chart nifty is trading below the resistance line. For bulls in power this expiry should close above 6288. From the elliot wave point, this was end of Wave 1 from 4624-6415. Now we expect correction of 430 points minimum to maximum 688 points if nifty trade nxt week below 6145-6152.

Our Strategy: SHORT Blindly below 6152-6145 and Sale on Raise with SL of 6450.. Downside targets for next few months 5950/5750/5470

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