Today was an all out Bear Day! Nifty opened gap down inline with the global scenario. The first trade which I normally associate with these kinds of openings is “Fade the Gap” trade. It failed and the moment it took out the lows of the day, the stage was set for the Bear onslaught. The above chart on the left is the 5 minute chart. We can see after an initial hesitation, we finally broke down. After that every up move of the Price was met with strong resistance at the falling 20 period EMA. The chart on the right is the hourly. In my earlier post I had mentioned that breaking the trend line of this Bear Flag (or as some would prefer to call it an upward channel!) the first logical target would 4000-(4250-4000) =3750. The SCARY still stays at 3400! The daily chart below shows that we have penetrated 3848 made a new low and closed back above the blue line again. The down move should find some support at the trend line (black) below which is at 3735 very near to the target of 3750. On the upside, once again a laborious effort needed to conquer the supports we have broken! As it is said in technical parlance “Old Tops become new Bottoms and old Bottoms become new Tops!”
we have seen a 1st wave dn from 4215 to 4004 (211 points) and a clear ABC up to 4117 and the 3rd has started down. Should fall more than 211 points (1.618 times 211 = 341 points..targetting 3776).This is just one possibility. The fall can be 1.38 or 2 or 2.618 times also. Subsequent to this 3rd down(Preferably at around 3776), we should have a 4th wave trading sideways/ violent up (without touching the 1st wave bottom 4004), head lower towards further lows to complete this 5th wave. This view seems reasonable with daily technicals showing weakness till Fri/ Mon.I would like to review the price action day by day as so much changes with volatality.
ReplyDeleteYour daily chart interpretation is very apt and we may get a +ve div in 2 to 3 days time.
Good going..