Weekly RSI has first time dropped below 30 since 2008 crisis which is clearly signal of bear market. Nifty had corrected more than 65 % of the value during subprime mortgage crisis. This is certainly a bear market considering reading of RSI. We have corrected 40% and now saw some kind of recovery. Normally 20-35% recovery is seen in price during bear market rally. 38.2% retracement and 50 % retracement have to be observed for supply pressure. I have become quite confident after seeing RSI value that it is not the time for bottom fishing and one should wait for sometime to see clear signal of HHLL structure on weekly basis. Hourly chart is showing HHLL but I will use 161.8% -261.8% projection to create short. Obviously, I will look for negative divergence of hidden divergence to confirm my trade along with candlestick patterns like wide bearish engulfing, shooting star or island reversal kind of pattern ( if gap up and gap down opening). I will follow 4 year average for clear signal though it will make me buy at costly level but my horizon as an investor would be on 4-8 years. Now, CASH IS KING for me.
Hidden Divergence is the key to understand that a stock has reached overbought stage in bear market. I am using 125 and 250 EMA on 15 minutes chart for cross over to avoid whipsaws. Minimum trades are always better than filling trade book for brokers and shifting account credit to smart traders.
Apart from technicals, world situation from COVID-19 impact appears to be heading for a worsening economic situation which will cause an upheaval in the market. Appears that it will be fairly long and the recovery as and when it comes will be slow. Your comparison with 2008 and analysis thereafter is spot on!
TukkaNomist
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@sanketsudan ji thanks. Global Economic shutdown which we are observing was last observed during great depression. Psychological damage will be more as compare to economic damage. We didn't see economic shutdown in 2008 or during 2001-2003 crash. 1987 was a flash crash and 1997 was a fund flow crisis but during all these crisis economic activity was not completely halted. Yes, economic recovery and confidence boosting will require time.