Nifty recorded an all-time high at 12431 in the month of January 2020. From the all-time high price declined in a three leg down move to record a low of 7511. The time taken for the completion of the down move is 45 trading days. From the low of 7511 price retraced in three leg up move and currently trading around 10778. The current up move has consumed a time period of 70 trading days.
Currently nifty is trading around the confluence zone of retracement and projection. The retracement zone of 66.6 percent of the prior down move from 12431 to 7511 is at 10738. The projection zone of 78.6 percent of the ongoing up move from 7511, 9890 and 8806 is at 10675.
A rising wedge pattern be seen on daily time frame. The two touch points at 9544 and 10223 form a lower support zone. The two touch points at 10328 and 10554 form an upper resistance zone. The upper resistance line and the lower support line is converging with the maturity of the pattern. The advances from the lower support line is becoming shorter and shorter, which makes the present rally unconvincing. The decreased momentum in price creates an upper resistance zone that fails to keep pace with the slope of the lower support line which indicates a supply overhang as prices increase. The key level of the ongoing trend is at 10194 and the critical level at 9544. The bearish confirmation of the pattern does not come until we see a VTB of support line. A valid break of the support line should be accompanied with a faster move in terms of price and time.
Price formed an outside bar with a higher high and a lower low. Outside bar normally indicates range expansion. In the present scenario the outside bar is bearish in nature with the close in the lower one third of the range indicating sellers in control. With a bearish outside bar we form a bearish expectation. But only on price breaking below the low of bearish outside at 10675, the bearish expectation is confirmed.
Trade Plan
One can initiate a short position below the low of outside bar at 10675 with an Initial Stop-Loss of 10850.
Disclaimer
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
Currently nifty is trading around the confluence zone of retracement and projection. The retracement zone of 66.6 percent of the prior down move from 12431 to 7511 is at 10738. The projection zone of 78.6 percent of the ongoing up move from 7511, 9890 and 8806 is at 10675.
A rising wedge pattern be seen on daily time frame. The two touch points at 9544 and 10223 form a lower support zone. The two touch points at 10328 and 10554 form an upper resistance zone. The upper resistance line and the lower support line is converging with the maturity of the pattern. The advances from the lower support line is becoming shorter and shorter, which makes the present rally unconvincing. The decreased momentum in price creates an upper resistance zone that fails to keep pace with the slope of the lower support line which indicates a supply overhang as prices increase. The key level of the ongoing trend is at 10194 and the critical level at 9544. The bearish confirmation of the pattern does not come until we see a VTB of support line. A valid break of the support line should be accompanied with a faster move in terms of price and time.
Price formed an outside bar with a higher high and a lower low. Outside bar normally indicates range expansion. In the present scenario the outside bar is bearish in nature with the close in the lower one third of the range indicating sellers in control. With a bearish outside bar we form a bearish expectation. But only on price breaking below the low of bearish outside at 10675, the bearish expectation is confirmed.
Trade Plan
One can initiate a short position below the low of outside bar at 10675 with an Initial Stop-Loss of 10850.
Disclaimer
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
At the End of the of the day Price formed an Reversal Bar. The reversal bar is a bearish bar but with a small body indicating reduced commitment.
Even though price made new high at 10894, price did not cross the resistance zone of 10900 due to which the present analysis is still valid. Price breaking the low of the Reversal Bar at 10756 will form an Swing High which will be the first sign of reversal.