Nifty: Was It Just Short Covering ?

Hi, Thanks for your response to my previous post which actually made profit for some traders. Expecting similar response for this post too.

So the rally did come, as per expectations, which took the index from 10701 to 10809 in just two trading sessions. However, it came back to the same level of 10711 and faced a hard push to 10837. Was it just short covering which started above 10770 and boosted by the breach of 10810 ? Well! it was one of the factors but the question is how short sellers were compelled to cover their shorts ?

And the answer is, It was the buyers at the support 10700-10710 who had a strong belief that this level has held the market twice and it will hold it this time too. At that time I was talking to a colleague sitting next to me that the market could reverse. As I looked on smaller TF, market was breaking out of a falling wedge, the first sign of reversal for me.

I was quite optimistic for 10750 at that time but market comfortably sustained above that level. Next halt was at 10830 and it just achieved that.

Present Scenario : Last week was a whipsaw. Can we expect a trend this week? I personally do not think so. Presently we are resting at an important downtrend line resistance.

Case 1: If we continue to move above 10830 level, we have a second bearish bat pattern sitting at the corner. Coincidentally, the PRZ of both the patterns fall at 10870 (for further clarity see previous post above). Therefore, the level 10870-10900 may again act as strong resistance for the market. Which means, we may see reaction from this zone. It would depend upon the type of the reaction that the further course of action can be anticipated.

The more time we stay above the downtrend line, the more would be the chances to breach the PRZ resistance. In such a case, it may soon hit 10930 or may retest previous all time highs.

If bearish move is to continue, it has to come back fast into the bearish zone (under the TL). In such a case, after hitting 10870 (or before), a sharp reaction has to push the market towards 10810 and 10766.

Where would I go bearish?
I might trade opening small short positions near the PRZ. But I will go fully bearish below 10700. Until then I ll enjoy the spikes in some stocks like BajFin, Kotakbank and Lupin etc.

Case 2: We do not resume the current up move above the TL (10830) and reverse from there. In this case too I will go bearish below 10700 only. Below 10700 I would hunt for 10600 (Bat target 2).

I hope that this analysis will help some traders, who follow technical analysis, to take better decisions.
Trade safe, stay healthy.
Regards

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@Bravetotrade

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Five sectors that have shown good performance in the past, may outperform in future:
IT
FMCG
Consumption
Financial services
Private banks

Apart from these, Pharma seems to be bouncing hard in a hurry to catch up. Some good bets can be Lupin, AuroP and SunP.

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So we are floating below the down trend line but there is no sustaining reaction on the downside so far.
Seems like it's forming a downward channel on lower timeframe, u may call it flag. Let's see if we break on the upside and sustain, or not.
All the best for this week.

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Surprise!!!
Whole world is worried about recession but market is telling that we are growing like hell. Are we really ??
Anyways on technical front it bounced again from the channel low.
There could be aggressive bearishness below 10730 OR
Conservative stance to get bearish below 10700.
Until then play the ping-pong, buy the low..sell the high --Father of all strategies.
Good luck.

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May be today we ll halt near 10805-10815 resistance zone. Let's see what the price action tells us.

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As observed 3 hours hence, 10805-10815 was a resistance zone. We not just halted there, but reacted sharply.
Its not me folks, its technical analysis which speaks.

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Back on to the support. But just see how far it has pushed from the channel trendline. This time it did not sucked back into the channel as it did last time. These are signs or bear strength.
But let's see first how buyers react at the support. Keep a watch.

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support is dead.

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We may head towards 10640; 10590.

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We might be heading lower but a pullback can be expected on intraday basis.
Have a nice day.

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Below 10630, 10590-10600 could be a quick move..cmp--10633

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We had a nice little pullback in the morning as expected. Lately below the critical level mentioned above, we hit the target zone for today.

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Caution at 10700-10710 level. Normally earlier supports act as resistance.