Nifty Saw a Quick fall from 10178-9813 in just 6 sessions which was a night mare to most of the traders! But i am sure whosoever ready my blog on 19th Sept last week , when Nifty closed at 10148, they would have made good money in this fall. In my last post recommended to liquidate Long positions and Even go short for risky traders for the target of 9950 which was achieved yesterday.
So What next now??..Lets study some signs on Nifty Weekly Time frame
Last week fall has given a birth to Bearish reversal pattern ” Bearish Engulfing” right on the top of the chart. Generally such patterns are major sign of reversal for a medium term trend. To confirm bearish reversal, we require a low lower than the pattern in subsequent week and we have got that in first two days of the week itself. Now this pattern is said to be valid unless its high is breached which in our case is 10178! So from First instance it looks that we have turned around for a fall now…
Take Second instance , “Negative Divergence” of Nifty to it RSI! As marked with the Yellow line, while Nifty pinched a New high last week, simultaneously failed to make a new high on RSi which in simple terms denote that we were not able to close anywhere near to new high last week. Just sign is of losing rally momentum. So now this surely compliments Bearish Engulfing as stated above.
But now lets take a look at some other side of picture which is making market sentiments some confusing…..
Now if consider Wave theory, the recent top has two probability, 1) Wave 5th Truncated which supports downside momentum or 2). Wave C of a corrective pattern which can end this week. 20 Weeks average which also ought to be 100 days Average level is exactly at same level of 9780 which makes it a strong support zone. Even a quick fall has resulted in Daily indicators entering oversold zone . So this all factors are making some confusion at the Street..
So What should be next strategy ???
Looking at derivative Setup, traders are indicating range of 9700-10000 for a while. So difficult to take a one way call on either side completely. So as a risky trader we recommend to buy Nifty with Stop loss of 9780 and Sell when its near to 9980! Buy for safe traders would recommend to avoid trading unless the range 9700-10000 is breached convincingly with volumes.
To conclude my view in a line, “Short term view is of Strong short covering but for medium term tables have termed bearish for which i am awaiting confirmation soon”……
Do hedge your positions and i will see you guys soon!