Nifty
had shown sharp fall in month of September 2018. This might have been a
surprise or rather shocker for longs created near 11700 levels. We in our
earlier monthly update cautioned for an impending top. Read below a glimpse of
the update from the September issue
Nifty daily chart:(Published as on 7th of September,
2018)
Happened:
(Below is the gist
taken form our monthly report published in September,2018)
20 days and 5 days EMA: We are
showing this in the above daily chart of Nifty. These are short term averages
and quite useful for swing traders. The common tendency is that the 5 days
average moves away from the 20 days and then again it mean revert to the 20
days average. At the same time the indicator also helps to understand the
overbought zone and the extreme levels. We can see that the MA difference is reversed
exactly from upper end of 200. This level was taken out only once but that too
temporarily. During the entire up move since the low formed in December 2016
near 7900 levels the difference between 5 days MA and 20 days MA never exceeded
200 points. This is very vital information and so any further deviation of more
than this might hint towards unsustainable mania as the undertone.
Case in point –The overall tone
of the markets looks reversing on the downside. We have entered into very important phase.
As we have not yet seen reversal in the trend following system but at the same time
the indicators have reached the extreme reading and so one has to stay
cautious. For investors this is not the ideal level to enter and it is best to
wait for mean reversion back towards the long term average for fresh long term
investments.
In a nutshell,
the overall trend looks matured and we have started seeing the volatility. The
indicators have entered into extreme levels but it has been more than 22 weeks
since we saw lower high and lower low on weekly charts.This week we closed
below 11595 which is negative close below prior week in nearly 22 weeks. So it
is time to be cautious for sure and post this short term up move is over the
downtrend should resume. This is another way of following the trend. To avoid
the confusion and put it simply the trend looks matured and next few days are
crucial for confirmation. Fresh longs should be created with caution. A
decisive move below this week’s low of 11393 is important which will be first
sign of concern that the trending move is over and the Price and / or Time
correction is starting! The ongoing mania is going to culminate equally fast
and one should be quick to change the stand as and when it happens.
Happened: Prices topped out in early September exactly
as expected and we have seen one of the biggest declines since 2015. This
clearly suggests that an important top is formed. So where is Nifty headed from
here from medium term to short term perspective? Check the monthly update for
the medium to long term perspective.
Now if we
look at the short term charts, following are the trading strategy given in the
Nifty research report.
Below are
the trading strategy given over past few days and it has worked out brilliantly
well on Nifty:
Trading Strategy
given on 08th October morning- For today, short positions can be created below 10260 with 10320
as stop and target of 10200 or lower. Avoid creating long positions.
Happened: Nifty has
been moving precisely as expected and as per the trading strategy and moved below
the mentioned level.
Trading Strategy
given on 05th October morning- For today,
short positions can be created on move below 10550 with 10600 as stop and
target of 10500 or lower. Avoid creating long positions.
Happened: Nifty continued to move lower and 10550 was taken out with a Gap.
Trading Strategy given on 28th
September morning-
For today, short positions can be
created below 10950 with 11000 as stop and target of 10900 levels. Long
positions can be created only on move above 11030 with day's low as stop and
target of 11070 levels.
Happened: Prices took out the level of 10950 during
latter half of trading session and managed to achieve the target of 10900
levels.
Trading Strategy given on 27th
September morning-
For today, short positions can be
created on move below 10990 levels with 11050 as stop and target of 10940
Happened: Nifty moved lower towards 10953 after
breaking below 10990 levels.
Daily Nifty
trading research report gives the trading strategy for the day and equity
research report gives outlook on stocks as well. Get access to “The
Financial waves short term update”
and “Nifty trading update” here. Get access here
To know what
will be the next move of Nifty on long term to medium term basis get access to
our monthly research published under the name of “The Financial waves monthly update”. Subscribe now
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