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!