After a 21 day rally, the Nifty is poised for a correction.
As discussed since the start of this week, it was time for caution with the double top formation and the choppy session witnessed yesterday just about confirmed the possibility of the much awaited correction. Today, given the global cues the Nifty is likely to open with a flat to negative bias, and later in the day may witness some amount of selling.
1) The Elder Ray readings : Bull Power reduces from +223 to +182 Bear Power increases from +133 to +110, indicating that although the Bears have gained some strength they are still some distance away from their territory. It has now been 21 consecutive sessions with the Bear Power being in the positive.
2) The Nifty is trading above all its key EMAs and the DMAs, however a key note is that the 200 DMA which was threatening to turn upwards, has now resumed its downward journey. Another caution indicator.
3) The stochastics are still deep in the overbought zone.
4) In the above chart, the volumes have increased with the Nifty trading well inside the previous day's range. This is a good indicator of indecision and a possible reversal. The MACD histogram is also showing negative divergence. The ADX is indicating that the down move is at its lowest point while the up move is losing momentum and is unsustainable.
5) Considering the above, our trading plan for the day is as under
a) Below 5380, we will open fresh short positions with a SL of 5395 and a target of 5310. We will add to these short positions only below 5285.
b) Above 5305, we will open fresh long positions with a SL of 5285 and a target of 5365. We will add to these long positions only above 5410.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
As discussed since the start of this week, it was time for caution with the double top formation and the choppy session witnessed yesterday just about confirmed the possibility of the much awaited correction. Today, given the global cues the Nifty is likely to open with a flat to negative bias, and later in the day may witness some amount of selling.
1) The Elder Ray readings : Bull Power reduces from +223 to +182 Bear Power increases from +133 to +110, indicating that although the Bears have gained some strength they are still some distance away from their territory. It has now been 21 consecutive sessions with the Bear Power being in the positive.
2) The Nifty is trading above all its key EMAs and the DMAs, however a key note is that the 200 DMA which was threatening to turn upwards, has now resumed its downward journey. Another caution indicator.
3) The stochastics are still deep in the overbought zone.
4) In the above chart, the volumes have increased with the Nifty trading well inside the previous day's range. This is a good indicator of indecision and a possible reversal. The MACD histogram is also showing negative divergence. The ADX is indicating that the down move is at its lowest point while the up move is losing momentum and is unsustainable.
5) Considering the above, our trading plan for the day is as under
a) Below 5380, we will open fresh short positions with a SL of 5395 and a target of 5310. We will add to these short positions only below 5285.
b) Above 5305, we will open fresh long positions with a SL of 5285 and a target of 5365. We will add to these long positions only above 5410.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
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