Nifty may try to stage a small bounce-back, but selling pressure will resume.
As discussed yesterday, the Bearish Stranglehold tightened over the nifty, and the Nifty nosedived to 4919 before closing at 4935. Today, given the global cues, the Nifty is likely to open even more in negative. The technicals, as of now, are not giving out any trend reversal signals. Hence, although some traders and experts might foresee a bounce-back, we do not believe that the downtrend is any near to its end. Let us explain why.
1) The Elder Ray readings : Bull Power increases slightly from -97 to -93. Bear Power increases from -173 to -210. This shows, that the Bulls tried to regain lost ground and failed miserably. The bearish stranglehold has indeed tightened. No signs of this loosening yet.
2) The EMAs are still pointing downwards, and are about to form another stronger sell signal. The Nifty is trading below all its DMAs and the 50 DMA which was the only one pointing upwards has now reversed and started to point downwards.
3) The stochastics are well and truly in the oversold zone. This is the indicator which is favoring the Bulls.
4) In the above chart, the Bollinger Bands indicate that the down-force is piercing the support line. This would turn into a reversal signal, only when the bars leave the bottom Bollinger band well and truly. The MACD and the ADX are signalling a sustainable downward movement on the Nifty.
5) Considering the above, we have devised our trading plan for the day as under.
a) Around 4960 we will open fresh short positions with a SL of 4990 and a target of 4875. We will add to these short positions only below 4845.
b) We will refrain from opening fresh long positions for the day. However, we will cover our existing short positions around 4875 and wait for re-entry on higher levels.
c) We will not look out for a trend reversal during the day as of now, and wait for the day end charts to give out a trend reversal signal. The ADX and the Elder Ray are known to give out trend reversal signals in advance, and we will rely on them as of now.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
As discussed yesterday, the Bearish Stranglehold tightened over the nifty, and the Nifty nosedived to 4919 before closing at 4935. Today, given the global cues, the Nifty is likely to open even more in negative. The technicals, as of now, are not giving out any trend reversal signals. Hence, although some traders and experts might foresee a bounce-back, we do not believe that the downtrend is any near to its end. Let us explain why.
1) The Elder Ray readings : Bull Power increases slightly from -97 to -93. Bear Power increases from -173 to -210. This shows, that the Bulls tried to regain lost ground and failed miserably. The bearish stranglehold has indeed tightened. No signs of this loosening yet.
2) The EMAs are still pointing downwards, and are about to form another stronger sell signal. The Nifty is trading below all its DMAs and the 50 DMA which was the only one pointing upwards has now reversed and started to point downwards.
3) The stochastics are well and truly in the oversold zone. This is the indicator which is favoring the Bulls.
4) In the above chart, the Bollinger Bands indicate that the down-force is piercing the support line. This would turn into a reversal signal, only when the bars leave the bottom Bollinger band well and truly. The MACD and the ADX are signalling a sustainable downward movement on the Nifty.
5) Considering the above, we have devised our trading plan for the day as under.
a) Around 4960 we will open fresh short positions with a SL of 4990 and a target of 4875. We will add to these short positions only below 4845.
b) We will refrain from opening fresh long positions for the day. However, we will cover our existing short positions around 4875 and wait for re-entry on higher levels.
c) We will not look out for a trend reversal during the day as of now, and wait for the day end charts to give out a trend reversal signal. The ADX and the Elder Ray are known to give out trend reversal signals in advance, and we will rely on them as of now.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
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