Nifty: Potential For The Rising Butterfly

Its been a while since I wrote on the Index. In my last post I marked 10094-10013 as the key area.

Market tested that key area and bounced sharply. Although the Bat pattern could not complete as per expectations, market reacted near 1:1 level (10013) shown in the above post and the cautious approach on bearish side worked quite well in protecting us.

Current Scenario: Suppose the current move takes the market above 10330 level or above the red downtrend line. I that case, I would expect the market to retest previous highs (10490). If that happens, I would look for a Bearish butterfly pattern which completes near those highs @ 10510. So I would look for a double top scenario in this case (Caution: the failed butterfly pattern may quickly take us to 10620-10650).

As the 25 days cycle (+/- few days) is approaching (see following post) I am excited to see the reaction near 20th December. Therefore, If market make a double top near that date I will be careful b'coz a sharp move might follow.

Bearish Scenario: Although we are in a bull market we might consolidate a bit more. What if market could not breach 10330 but breaks 10141 on the downside, I would expect 9950 level (right at the red uptrend line) and then look for a bounce.

Trade safe, stay healthy.
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Regards
Bravetotrade

Comment:

Market opened with a gap right above the downtrend line we discussed yesterday. But buyers didn't show interest beyond those levels and it lost some of its gains in the later hours.
May be the buyers will show interest at the lower levels at 10280, where today's gap fills and then the up move continues.
Although it's difficult to predict the markets next move yet bias is on the upside.

Comment:

Ohkeyyy today is 20/12, the long awaited date on my chart above. And the index is opening right at the butterfly PRZ which is also a previous swing high. I ll be cautious at this point and will trade specific stocks only.

Comment:

There has been a reaction, whether it will continue or not..I can't say as of now.

Only thing I can say is that bears had nice control today, and continuation on the downside may take us to 10320 which would be an important level now.

Comment:

Open equals high on 20/12 as well as on 21/12, it is bearish. Is it 25 day cycle reaction? I think so. If it's true we may correct for 4-5 more days.

Today's candle has been a continuation of yesterday's downmove, means bears had control.

10410 could be a halt in the current downmove. However, the butterfly first Target of 10320 still remains intact.

Short term bearish stance is still valid, unless market surprises us with a strong gapup beyond 10500 :)

Comment:

If we just trade as per the butterfly pattern, the prz has not yet been touched. It seems the index has been trying to fully test the buyers and sellers at the prz. If that happens, it may either breach the 10510 level or retrace. Until there is a strong action above 10510, I am anticipating a retracement of the order of atleast 200 points as measured from the prz.

Comment:

On daily charts We have seen half hearted breach of the prz on upside, followed by an outside bearish bar on 27/12, bearish pin bar on 28/12 and strong bearish reaction on 1/1. Today we tested the first halt 10410, I talked about in my previous update. We traded below yesterday's low but closed above it.
Although we saw buying at the lower levels yet If this downmove continues the next level to watch will be the same 10320 zone, which is the butterflies first Target.