Do We Need To Be Cautious ?

Bravetotrade Mod Updated   
NSE:NIFTY   Nifty 50 Index
Since festive season is over here in North, I might spare some more time to write on TV.

Let's begin with this post on Nifty . In my last post I tried to time the market in anticipation of a correction. Although market reacted for a few days from there, yet I can't call that a correction. Price-Time analysis has once again been hinting at something but this time let's not talk about time and talk about price action only.

Few words of caution:

First of all we are in the uncharted territory which is highly bullish . But that does not mean that we ll have a parabolic ride on the upside only. There will be corrections and consolidations.
Secondly, we are at the upper end of the uptrend channel , in which markets have been gyrating for the past few years, which could be a concern.
Thirdly, patterns similar to previous corrections have been observed near the upper end I just discussed.
Fourthly, Jumping out of the channel takes us to an overbought zone which demands consolidation/correction. I am just saying it on price action basis not on any indicator basis but you can have it confirmed if u want to.

So If history is to repeat, we might see correction. In this scenario 10400-10425 would be the level to watch out for. At present I ll not discuss levels below this point and would reassess once the market reaches that point.

I might be wrong:

I would be happy if markets correct but my heart ll go "gaga" if markets make new highs, because I have just reduced on my long positions I am not short yet.

So let's say the current move has more legs on the upside.
Here I would assume that markets have been trying to develop a new channel which has its upper boundaries outside the current channel.

What should be the levels on the upside to book more profits?
I ll look for 10800-10850 zone to book some more profits.
10930 would be an extended zone for major concern.
If this level is achieved and we correct, 10530-10600 zone may offer a first level of support.

I a nutshell, in the backdrop of the above cautious notes, I would like to book some profits at this stage and would use trailing stops on remaining positions.

May we all make nice profits in this year too.

The index just touched the extended Target and made a high of 10929.65. Now the question is, where should be our trailing stop to manage our positions. An aggressive stop could be at 10880, the conservative one could be 10780.

JJ Singh
Full TIme Trader/Investor
Moderator, TradingView

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