Nifty has been in a strong up-move with liquidity around the world flowing inside the markets which has been just supported by improving fundamentals. To say , last rally can be accredited to liquidity while still a long term fundamental move is yet undone. Since February we had seen a complete game in hands of Bulls but somewhere bears are getting charged up for a furious war around the corner. But last weeks sell off got some fear waiting for bulls “BEHIND ENEMY LINES”. Technically charts haven’s given yet any strong bearish pattern on Daily charts, but there are few small Enemies waiting for Bulls at the Lines:
Enemy Line 1: 8820, a gap unfilled since the last weeks opening which could act as some support for intraday Low
Enemy Line 2: 8800, which has been lined by Option writers as a support for longs on closing basis which should be watched out
Enemy Line 3: 8750, which is indicated as the last support to bulls and should be considered as a stop loss to all longs initiated for a short term trade
Enemy Line 4: 8720, which was the breakout level from the consolidation pattern of last 2 months could acts the trigger point for Fresh Shorts.
So, Behind these Enemy lines, Bulls are going to be beaten up like hell and bears could take over them easily.
“Strategy”: Keep stop loss to all current longs at 8750 and short Fresh if Nifty closes below 8720 for a day!
Though expect markets to be volatile and you should hedge your self with appropriate options! Have a wonderful week ahead.