Now what next?
Few weeks ago i cautioned bulls. That time no one was taking it seriously.
BUt time has proved the technicals right again.Now what next lots of people are asking what next where this corection will end where to buy?
Now lets see the Nifty monthly charts of Nifty once again. I mentioned the Nifty trend line resistance on monthly charts. Last monthe Nifty tried to cross that resistance giving a sign of new rally. But that was just a false break out mainly triggered by "SEBI circular on Ban of P-Notes", Where FIIs forced to cut their shorts in a jiffy.In whole this short covering drama Nifty went to 10000+.
Now look at another picture.On monthly charts Nifty respects 5 months SMA on a broader basis.
In Jan 2008 when Nifty reversed from that trend line and then break the 5 Month SMA(which was 5592) Nifty went down by another 1000 points nearly 20% from 5 month SMA and nearly 30% from top of 6136.
After that Nifty remained below 5 Month SMA for almost 15 months and gave a monthly closing above 5 MSMA in Mrach-2009.And after that we have seen a huge rally from 3020 of March-2009 closing to 6330 in Nov-2010.
Second time when Nifty touched that trend line in Jan-2015 and then in March nifty went below 5 MSMA by going below 8614 and that bear phase continued for almost 11 months and went to 6987. In March-2016 Nifty came back above 5 MSMA and then again a rally to 8968 in just 6-7 months. In Nov-2016 we went below 5 MSMA due to Demonetisation but that happen for only 2 months and we came back above it beacuse of lots of liquidity which came in the system due to this Demontisation. And again a fast and furious rally for 6-7 months all the way from 8561 to 10137.
Now lets coming to present. On Friday(11-08-2017) Nifty made a low of 9685 and as of now 5 MSMA is 9646 so if you get monthly close below 9600 it will change the trend again.
From lows of 7893 of Dec-2016 to highs of 10137 made few days back 9608 is 23.6% retracment of total move so again 9600 is an important level. Next retracment level is 9280(38.2% retracment).
Now coming on daily charts.
On Friday Nifty made a evening star Doji candle pattern which can be a sign of short term reversal. It also touched a support trend line shown by yellow line. next major support is lower trend line shown by green line.Next support is at 89 Day SMA which i use as a trend decider. Right now 89 Day SMA is at 9587 and in next 2-3 days it can move near to 9600. So all major supports are coming up in the area of 9600. Any weekly close below 9600 will close the gates for bulls and we may see another 300-400 points on downside quickly. Another point to be noted is 9712 is the 61.8% retracment from recent lows of 9448 to highs of 10137 and we are very near to it.
Few weeks ago i cautioned bulls. That time no one was taking it seriously.
BUt time has proved the technicals right again.Now what next lots of people are asking what next where this corection will end where to buy?
Now lets see the Nifty monthly charts of Nifty once again. I mentioned the Nifty trend line resistance on monthly charts. Last monthe Nifty tried to cross that resistance giving a sign of new rally. But that was just a false break out mainly triggered by "SEBI circular on Ban of P-Notes", Where FIIs forced to cut their shorts in a jiffy.In whole this short covering drama Nifty went to 10000+.
Now look at another picture.On monthly charts Nifty respects 5 months SMA on a broader basis.
In Jan 2008 when Nifty reversed from that trend line and then break the 5 Month SMA(which was 5592) Nifty went down by another 1000 points nearly 20% from 5 month SMA and nearly 30% from top of 6136.
After that Nifty remained below 5 Month SMA for almost 15 months and gave a monthly closing above 5 MSMA in Mrach-2009.And after that we have seen a huge rally from 3020 of March-2009 closing to 6330 in Nov-2010.
Second time when Nifty touched that trend line in Jan-2015 and then in March nifty went below 5 MSMA by going below 8614 and that bear phase continued for almost 11 months and went to 6987. In March-2016 Nifty came back above 5 MSMA and then again a rally to 8968 in just 6-7 months. In Nov-2016 we went below 5 MSMA due to Demonetisation but that happen for only 2 months and we came back above it beacuse of lots of liquidity which came in the system due to this Demontisation. And again a fast and furious rally for 6-7 months all the way from 8561 to 10137.
Now lets coming to present. On Friday(11-08-2017) Nifty made a low of 9685 and as of now 5 MSMA is 9646 so if you get monthly close below 9600 it will change the trend again.
From lows of 7893 of Dec-2016 to highs of 10137 made few days back 9608 is 23.6% retracment of total move so again 9600 is an important level. Next retracment level is 9280(38.2% retracment).
Now coming on daily charts.
On Friday Nifty made a evening star Doji candle pattern which can be a sign of short term reversal. It also touched a support trend line shown by yellow line. next major support is lower trend line shown by green line.Next support is at 89 Day SMA which i use as a trend decider. Right now 89 Day SMA is at 9587 and in next 2-3 days it can move near to 9600. So all major supports are coming up in the area of 9600. Any weekly close below 9600 will close the gates for bulls and we may see another 300-400 points on downside quickly. Another point to be noted is 9712 is the 61.8% retracment from recent lows of 9448 to highs of 10137 and we are very near to it.
Conclusion: 9600 is final stop for bulls. Seeing a 400+ down side in just 1 week we can see a bounce in next week. And below 9600 free fall of another 400 points.
Disclosure: I am not a SEBI certified analyst so this is not a buy/sell recommendation. This post is just for study purposes. Further i do not have any position in Nifty or BankNifty futures.I am having some positions in Nifty Options to hedge my Portfolio.
excellent write up mr.market ..thanks for sharing this info with us
ReplyDeleteThanks dear
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