Nifty charts have been like a pendulum between red and green candles. But finally we have resisted near to 8980 or to say 9000 level which i had been mentioning in my previous post and it looks like it was the end of 5th Wave of a smaller degree. So next would be correction phase which could be a sharp fall or consolidation phase. Fundamentally we dont find any trigger in coming weeks but may be politically we have UP election results to decide whether correction is going be a sharp fall or consolidation.
Technically we can decide to support levels which could help us to decide degree of correction, 8780: if current fall takes support at this level, which also has a gap unfilled, than we could consider this phase to be a consolidation but if we fall below this support than it can be more sharp correction towards . 8480 which is another gap unfilled. Taking some snap from indicators, we are in overbought zone on daily charts since January and a correction is surely due this expiry from Option data setup. So now i would short fresh on the index…
Strategy for Traders: Short Nifty with tgt of 8780,8560,8480 while Stop loss could be 9150 and would hedge buy going long on reliance with tgt of 1325 sl: 1150
Strategy for Investors: Arrange for some liquid funds as in next 20 sessions its gonna be opportunity to accumulate stocks at 8600 and than 8450 levels on Nifty.
New year 2017 has been good for traders until now and even on monthly chart gave strong reversal for investors. But the rally couldnt be without any hiccups and we are going to have one. 8530-8980 was my range mentioned in last post , but couldnt touch the high of the range but can get closer to downside range.
As we could notice in the chart, last 7 sessions have been sign of losing momentum. We got 7 consecutive red candles which means markets closed below the level where it open for the day which clearly signs that traders are selling on any positive opening fearing markets to fall. This fear finally turned to reality today as Nifty closed below 4 day SMA and 9 day SMA after 36 straight sessions of positive close over the same. Even indicators such as RSI and MACD has given negative crossover to confirm bearish signs from price and MA crossover.
So now to sum up, still the charts for long term are positive but we may witness some profit booking before expiry which may take support at 8652/8600/8580.
Strategy for Traders: Square-off Longs and short with stop loss of 8860
Strategy for Investors: Buy on each dip with stop loss of 8410 for investors.
“Achhe Din aayenge” had been most chanted slogan around India Since 2013 but now actually “Achhe Din aa Gaye” in last two months. Though Demonetization has been criticized by most the population of India but thats because short term pain they went through during Nov-Dec. But as saying goes “सब्र का फल मीठा होता है” , we as a responsible citizen of India should wait for Demonetization’s fruitful results in long term. Few of the fruits have started ripening such as economy outperforming other developed economy, decreasing Indian CAD, rising digital transactions, decreasing bank rates, rising tax payers, rising tax slabs, increased government spending on infrastructure, liberalized FII norms, passing on benefits to farmers and counting…So actually we are moving towards a phase where our each day would be labelled “Achha Din” and credit will go to citizens of India!
So coming back to markets and particularly to Nifty, we are sensing a strong pattern on Monthly time frame…..
As you all could notice in the chart above, circled candles symbolize a Morning Star pattern which is bearish reversal and being on monthly chart it has strong significance. But investor to get confirmation, we need to hold 7900 level for next two series. Looking at other indicators on Monthly chart, we can be sure of buying on each dip for next few month holding
Strategy for investors: Buy on each dip with stop loss of 8200!
Coming to short term traders, i had a target of 8720 which was just achieved before closing on Budget day.
If you look at daily chart above, we are in overbought zone and nearing to resistance line of the channel but that doesnt mean we will resist for cent %. If the momentum is still strong on stocks, we may still get 300 points rally this series as indicated by option data. So for a fresh position its risky but still may go with a a hedged spread above 8725 tomorrow.
Strategy for Traders: Hold existing longs with trailing sl of 8530 with upside tgt at 8980 and for fresh buyers go long on PSU Banks (Preferably SBIN tgt 290, BoB tgt188) with a hedging of 8500 PE.
See you guys until we kick out 8980 or slip down 8530..!