19th Oct ’23 - How do we recover from a Gap-Down Like that? Nifty Weekly Analysis
Between the last expiry and today, Nifty has only fallen 172pts ~ 0.87%. Meanwhile, BankNifty fell 1.42% in its weekly expiry (we discussed it in yesterday’s newsletter). Nifty is still range bound whereas BankNifty has dropped below the support. Usually BankNifty leads the reversals, so we can increase our expectation of a fall in Nifty going ahead.
Nifty Today Analysis
Recap from yesterday: “On the 1hr TF, I wish to change my stance from bullish to neutral but with a bearish bias. The rationale being the intensity of the 10.15 candle that cut through the support. That candle looks purposefully planted to bring a bearish bias. If we start moving downwards tomorrow, my first target will be 19600 followed by 19529.
Quite interestingly both predictions came true, we broke the targets 19600, 19529 and ended the day with a neutral tone. I was not surprised by the gap-down open of -100pts or so, it was expected as SPX ended the day with a loss of 1.3% yesterday. What surprised me was the recovery of 168pts ~ 0.87% that came between 09.35 to 14.05 wherein Nifty50 traded in the green for a brief period.
Usually, when the bearish targets are taken out it means we are falling and the market has no will or power to climb back. The 5mts candle at 11.25 alone gave a boost of 60pts. Getting your view right and making money are 2 different things you know. The moment you go bearish, you get an instant reversal taking out your stop loss. This might have been the case with most of the traders today.
From the 1hr chart, you can notice how deep the gap-down open today. And the 11.45 candle that closed the gap with a gain of 86pts more or less would have taken the soul out of the bears. Since we are between 19446 and 19776, Nifty is still range bound - but BankNifty has fallen below the support and is looking weak. For tomorrow I wish to change my stance to bearish with the first target of 19511 and 2nd target of 19446. If we are climbing up, would not prefer to go long until 19776 is not taken out.
