Nifty was in a confused box just two days ahead of expiry but bulls took it over at the last moment to prove Positive divergence as i mentioned before.
Though after yesterdays Dragon Fly Doji on Daily chart of Nifty many would have initiated a short trade…. Am i right??…But i didnt….Why and how did i get right?…because this was the perfect example of a Right candle but at a wrong time! Which means that a Dragon fly doji has most significant Only if its at the top of a previous rally and we were nowhere near top yesterday. So frankly speaking it would have been like burning fingers against the trend for short term traders. Though it doesnt mean long term trend has been a turnaround…This rally is just a short covering as i mentioned before. On The upside now we have strong resistance near to 200 Day sma at 8252. So short term traders should start booking on my long calls in the range of 8200-8250 in intraday…..
P.S. Strategy remains the same as last post…here is the snap…!!
Nifty has been pretty volatile in the range of 7900-8300 but the strategy is working well for the spread traders as i recommend in the previous post: ” Go long on stocks and short on index for next two expiry”…..And even long term investors are safe as they were recommended to buy PUTs on each rise…but short term traders Burnt fingers as stop loss was triggered at 8088!
Today, after a strong short covering move on Nifty, still we are in a Confused Box of Technical signs!
As you all could notice with the Green Trend line with today’s low, we have got positive divergence on Nifty which is a good sign of short covering. Even the options suggest that next two days can be for the bulls after a long time. But i am not convinced thoroughly with Candle stick pattern for a strong reversal. Even all short term moving averages have given a bearish cross overs to a larger degree of Moving averages signalling that yet the move is not completely in hands of Bulls. On the upside of the box we have 200 day SMA at 8252 which could act as a strong resistance for short covering.
Even on the fundamental side, we may get some boost from news and FII before budget as the stocks are much undervalued but the quarterly results would surely drag Nifty to last lag of correction before we completely take a U-turn towards new high. So Long term investors shouldnt chip in a hurry for Jan rally as this is just a relief rally for Bulls while investors will surely get a better chance after Budget and before March ending.
So strategy still remains the same:
Short term traders: Go long with Stop loss of 7920 and Target 8250
Safe traders: Buy PUTS for February on each rise with Stop loss of 8720
Spread Traders: Go Long on selective Stocks and Short on Index
Markets have been playing between Demonetization and Global Rally, making it difficult for Analyst like me. Though until now it has been perfectly moving as i predicted in last few posts but still traders want me to give them exact point of Trades on #Nifty and am sure other analyst friend out there would agree with me that is difficult to always pick right levels. So we can always give you “Probability ” and not “Surety”. This time too i have got 4 Probabilities from this level on Nifty which is 8261. Current rally on Nifty could be either Short Covering or 5th Wave rally which could give us new high but confirmation could be done after we resist at some “Peak” ahead.
So this current rally could stop on 4 points on the upside: 8320, 8440, 8566, 8720. But i would give most likely PEAK to 8440-8566 as its they are levels also suggested by Open interest side too. Technically both levels are 50 DSMA and 100 DSMA too making crucial resistance levels. Where as second most likely peak could be 8320 which is small channel resistance on daily charts while the rarest possibility is 8720 which is a Fibonacci retrenchment level.
Conclusion 1: Rally is most likely to resist near to 8440-8560
What next after likely resistance at 8440-8560? Now the downside we can get two possibilities: 7640 and 7400. For me most likely target is 7640 because if market resist on any of my likely level, 8440 or 8560, it is the predictable target from both. But in the extreme fundamental effect of Demonetization 7400 could also be achieved which is a Fibonacci level and also Support at a trend line intact since the low in 2009. Trend line has been tested successfully 4 times before making to cemented low for this rally.
Conclusion 2: Possible Downside target 7640
Now taking into consideration that Nifty would resist to 8440-8560 and would resume downside for 7640, the best strategy would remain as my previous post “Can 3:30pm tomorrow be a morning for traders ?”
Snapshot of strategy
So for short term traders playing this rally on long side , stop loss is 8088 as mentioned above which is 50 weeks average
For Safe traders hedging portfolio with PUTS as mentioned above would have stop loss at 8720 which is fibonaaci turning level
For spread traders remain with buying stocks and selling index as short covering on Stocks could be fast and furious. …….
See you guys then at 8088 or 8440-8550!
Ah….you might be thinking that i have gone nuts…”how can a afternoon be a morning”???…But for Nifty Traders that can come true….Tomorrow being a weekly close, i just spotted a possible reversal pattern on Nifty Weekly charts which is known as Morning star pattern but the close tomorrow would be the game decider. Lets first look at the following weekly chart
I noticed few interesting things on Nifty weekly charts which supports short term view for covering recently lost ground. Lets first talk about Morning star pattern which has made my headline today. Though the formation is not the text book one but we may still get it too close. In the pattern first candle we need deep red (8288-8048), Second candle should be lower than the first candle and preferably it should be a Doji (8122-7916 and a Dragonfly Doji) and the third candle should trade above second one completely and close atleast 50% into the first red candle..(8080-8168 ?) . So for the pattern to be true we need a close above 8168 tomorrow which is quite possible. Secondly, Nifty has been taking closing support above 50 Weekly average (Pink line which is at 8088) since recent two close and close its intact as support since May 2016 which fuels are biased view for short covering. Thirdly, Looking at indicators such as Weekly RSI, we are oversold and healthy short covering would be better before moving towards last lag of profit booking on Index.
So the targets for short covering moves are 8450-8550!!! “why i still call it a short covering move???” Because my medium term is still of a bearish as i have been posting in my previous posts “500/1000 points to be sucked out of Nifty?”
Now let me take you to a tour of Nifty Daily charts which would give us more strong reason why its just a Short covering and not a rally?
Just one big reason which is supporting my view of a medium term bearish trend is ” Negative 50 day cross over 100 day average as circled” Moving average crossover is the most effective tool i have came across for medium term trend crossovers.
So the strategy is simple:
For traders: Go long on Nifty with stop loss at 8088 with short term targets of 8400/8500
For Investors/Medium term traders: Sell on rise as mentioned in all my previous posts with SL of 8700 with tgts 7800/7670/7450 for next two expiry
For Spread traders: Go long on stocks and short index for next two expiry
Anyways see you guys soon after we near the end of short covering move!! Trade with strict stop loss on both sides…..!!
Nifty has been “Demonetizing” itself since 9th Nov and it has now triggered my much expected Short call Below 200 day SMA with two consecutive close below it. Though many safe traders wait for a third confirmation but i preferred to go short today itself as a intimated in my previous post.
Previously recommended Strategy:
So i believe positional traders have sold if not yesterday then today when we opened way positive. Now the picture has turned completely negative for the short term and we can say any rise towards 8700 is opportunity to sell. Technically indicators on daily time frame are surely in oversold zone but remember even if indicators are in negative zone, we could still go more deeper. So where indicator limits itself, Elliot Wave comes into the front seat. So as of now counting close that we are into complex Corrective Wave pattern and the upside should be capped at 8700 while the downside target could be 7650! though there is always alternate count, but currently situation calls for 7650 on positional basis. Those who has gone short on my recommendation below 8120 , keep my previous post targets in mind to book on shorts. Follow strict Stop loss as per strategy above…
See you guys soon now at 7800 or 8550 whichever earlier!!
So Finally after 3 months of patience all my downside targets upto 8150-8250 has been achieved. In my previous post i mentioned about a crucial pattern “Multiple H&S” which had a neckline at 8560 and we did respect it on closing basis with targets on downside touched in just one day due to unexpected event. Demonetizing 500 and 1000 currency notes have turned charts of Nifty more cruel. Technically there is always a alternative count and for my previous count of bottom at 8150 , alternate target count was 7300-7600 which is now seems to be coming. …..is true and am not scaring you guys!!! Though for a confirmation we need to wait for Nifty to close below 8150 which is 200 day average and also previous bottom count. Market may not see Free Fall from here but gradually we may get there!! On the upside we may now have a ceiling at 8580, which is strong neckline resistance as market with red horizontal line while crucial 50 day average is 8690 is to be breached for bulls to be back in drive!
Now looking at some long term charts, Monthly on Nifty, we could see how crucial is 7400 support line which is intact since the low of 2008. Support line level of 7400 is also coinciding with at Retrenchment level of recent rally of 6825-8960..So stay alert if we close below 8120!!
Fundamentally what could justify my view??? ….Answer : Consumption story! The recent step of government is surely a game changing for a long term story and growth of India but a short term to medium term, its gonna hit balance sheet of companies. Q3, and to some extent even Q4, would see a great fall in demand of goods and services. Purchasing power of most individuals would take a hit as cash is completely sucked out and so is black money. A common man would cut down on extra purchases for a time being which could hit sector such as Auto, Capital Goods, Real estate, Cement and Textile industry.. But on defensive side sectors which are daily needs such as FMCG, Pharma and to some extent Education can do well. So its best time to accumulate stocks of Defensive sector while wait for few months to buy other sectors.
Risk Takers sell on rise if we breach 8120 for December/Jan expiry with upside Stop loss at 8700 and targets on downside 7800/7670/7450
Safe traders avoid any trading for next few weeks and sit on liquidity to purchase for long term below 7700!
Will update next if we breach 8700 or 8120!! Until then Trade safe!!
Humpty Dumpty Finally had a great fall from the 8550 wall! But for me this fall was interesting as it was anticipated on charts since long time. In my last few posts, strategy had remained to be Sell on rise while for safe traders i had been recommending 8600 PE Novemeber…Here’s a snap short of previous few posts…
Strategy from 16th October: Recommended 8600 Puts for Safe traders
Strategy from 29th September: Recommended 8600 Puts for Safe traders
Strategy from 14th September : Recommended Sell with lower Targets
Strategy from 26th August: Head and Shoulder anticipated
So am sure those who have followed my previous 4 posts on Nifty in last 2 months, they are into Huge profits as have been continuously recommending 8600 PE longs with tgts of 8550/8300/8150…
Technically, Nifty has entered Corrective Wave 4 of a larger trend and the fall is always with heavy volumes as common traders would think that we have started bearish trend again BUT THATS NOT THE CASE! This fall is purely a short term profit booking before we start WAVE 5 move back in the direction of larger wave. During this course of correction for a medium term time frame, Nifty charts have emerged with a rare corrective pattern of “Multiple Head and Shoulder” on Daily charts. I had already anticipated this pattern on 26th August post but didnt expect it be with a Multiple structure. This pattern is surely a bullish reversal but before that we may see some pull back and nifty would give chance to those who missed my call earlier…“Something is better than Nothing”….
As outlined with Red lines, multiple H&S has got breakout confirmation at neckline 8550 which was also a 100 day SMA making breakout more convincing. But yesterday we have taken a strong support at downside channel support which is intact since last 2 months.. So may be a pull back could be expected until neckline at 8550 as marked with red horizontal! That could be entry point for those who missed out earlier for shorts.
On the downside, target from H&S is at 8100 which is coinciding with other multiple levels of 200 day average and Wave 4 Support. So it makes our target more probable..But to be on safer side we would book profits on shorts near 8250
Book 50% Profits on 8600 PE NOVEMBER ,which would bring down cost of holdings to almost Zero as price has doubled since recommended. Keep a trailing sl of profits at 8650.. On downside cover all shorts near to 8250-8300 Spot levels..
Will get back to you again if 8300 or 8650 is triggered now!!
Markets had lots of buzz in last 10 days, starting from a Surgical strike, World War and Deutsche bank bankruptcy but that was in line of “Technical charts expectations”. Recent high on Nifty at 8806 was exactly where i expected in my last post on 29th September at
Strategy suggested was :
Now if you are safe traders then am sure you have accumulated good number of 8600 PE November and if you are risky traders am sure you had covered longs around 8806 and gone double short with the SL of 8980!
So one thing has been confirmed in last 10 days that Nifty has turned bearish and any rise would be an opportunity for medium term traders to go short again for good downside for my previous targets at 8150-8250!
“Are you trapped on longs at 8800? Dont worry you may get a chance to exit in next week….”Technical Nifty is into a Corrective Wave which at present seems to be in zig-zag form which is most destructive of all forms in of Corrections. But corrective wave seems to be forming a complex pattern which “Can” give a strong pull back from here near to the start of wave A which is 8980. Looking at the charts of Nifty , we can see it has already started a downside channel which is the first characteristic of Wave A. Now Question is the degree of Pull back?? …Its very difficult to say at this juncture where can a next pull back end but looking at other factors currently 8800 +/- 20 points seems to be the strong resistance but it may go upto 9000 +/- 20 points too… Next two weeks up-to Diwali could be again volatile markets with earning season picking up but would strictly stick to Nifty levels for a trade….
For Risk Traders
Cover all shorts which you have initiated around 8800 as i recommended in my last post and go longs for short term at CMP with stop loss at 8490 and tgts 8740/8820/8920. After Target one is achieved Keep trailing SL of last target and start buying 8600 PE of November with stop loss of 9000 +/-20 points
For Safe Traders
Strategy remains the same of buying 8600 PE November on each rise with 9000 +/- 20 as Stop loss!!
Ultimate Target in coming months still remains “8150-8250″….SL 9000+/- 20 points
Today was one of the most interesting expiry end of my career! It feels good when you have initiated call against 90% of the public on D-street and you get in right in just last 3 hours of trade. Had been betting on bears since mid expiry but wasnt get it right until today when i got reason to my view posted on 20th Sept in the post : “Reason would be just a confirmation!” . Just a small sign of war and we got the much awaited profit booking on cards which almost got my target 8550 mentioned in the post above and return ticket of bulls is confirmed now! But would the fall be immediate ???……. Surely, NOT!! ….. Though medium term outlook turns bearish, but a pull back cannot be ruled out in immediate sessions!! What has given me the most fear for a more downfall is Nifty has closed below 50 Day average at 8688 for the first time since early march which indicates that sentiments are turning bearish for next term and also weekly charts are expected to give a bearish close tomorrow after many months. But then why a small pull back???…….. Global sentiments could be the reason!! …OPEC decision to cut production has raised indices of Global markets and that could support our pull back for sure….. So calculating from all possible ways, we can get a pull back to 8715/8820/8870 levels in coming days. Its difficult to say one point of reversal today but 8820 seems to be more likely because its coinciding with a channel resistance too! ……So what after a pull back??……. Looking at Fibonacci i feel 8150-8250 could be level where markets could take support. Between the range we have many gaps unfilled and also we have a neckline support of “inverted H&S of Nifty” which i mentioned in my post “Time for investors to be Active!” on 14 July 2016 !
So to sum up, surely my view is bit biased on downside, but anything is possible!!
My recommended Strategy:
For risk traders:
- Go long with Double stop loss at 8550 first for targets of 8820 where you go double short with stop loss of 8980
For safe traders and Long term investors:
- Buy 8600 PE November expiry on each rise from tomorrow with stop loss at 8980 on Nifty spot….
Target on Nifty: 8150-8250
Volatility has been peaking since last few sessions, not just in India, but around the world. This brings some fear among traders. If we talk about some crucial factors signing a massive move ahead are: 1) Cash Portion avg in US Mutual fund is at 5.5% which is near to the same level it was in 2008 just before crisis. 2) VIX position in US is at record high levels. 3) Foreigners Open Interest in Indian Derivatives is at record high levels of life time. These are the few points which gives me strong intuition of a massive move on either side ahead!……..Which side? …….I would say preferably Sell Side! In my last post i did mention to go Sell on rise on Nifty and we got ample opportunity to go short at higher levels than the day i posted. Let me point out to you a downside channel which is just confirmed today making support for near term around 8550 while for resistance side 8800 is upside channel resistance as well option resistance built up today. So may be for this 8800 could act as resistance and 8550 as downside target. All saw Nifty PCR at 1.10 ! But why arent we getting that downside move quick?….Because we need a reason to confirm downside… This reason could come in from FED, BoJ or War…It wouldnt matter what the reason will be but its going to get a tag for next fall….So strategy remains sell on rise with first target at 8550 and SL at 8980.