In my last article on 8th April, I categorically asked to exit long positions....Since then, we saw the Nifty slump to 5250 from its highs of 5400. In fact, I had also mentioned that a bounce till 5278 was possible and clearly NF found resistance around that level on 9th, before succumbing to selling pressure.....
Now what? A severe breakdown or breakout above resistances....
What I find on charts may not much to all's liking but I find bearish moves on charts. Whether you consider the 'Mirror Image Pattern' or you consider the 'Wave Theory' or you consider the 'Parallel Bar formation', you will find a correction in the making. The targets defined by these corrections are very stiff in nature ranging from 4798 to 4400 in panic situations. As we have seen VIX, after hitting the all time lows of 17, has retraced to 21+ this week indicating some volatile path ahead. Also if you analyze the PCR on a running basis, you would have noticed it fluctuating between 0.96 to 1.5 (Trade quantity basis) and 1.2 to 1.55 on open interest basis. Such wide fluctuations suggest that something is hidden behind what we can see.
Have a look at the following Nifty charts....
I) short term trend broken, II) Parallel Bar formation
III) Long term support around 4798
The above charts are self explanatory. Further one may refer to the US charts where an expanding divergence is formed on price patterns which suggest a fall till 10000 on Dow and 1076 on S&P500.
Everything may get negated if markets start trading above the recent highs for 2 consecutive days. Otherwise stay in cash or short at any bounce with recent highs as stoploss....
Happy trading.....
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