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Nifty: Expect sharp intraday swing movement by next session

HDFC Sec | 31 Jan, 2017  | Follow Author | Add to my Favourites 
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Current Observation:

- After showing consolidation during last session, Nifty slipped into sharp weakness today and closed the day with the loss of around 71 points.

- Nifty opened today with flat note and shifted into gradual declines for entire session. The intraday upside recovery attempts have been used for creating fresh short positions. Nifty closed near the day’s low.

- A long bear candle has been formed today, which is suggesting a top reversal pattern at the swing high of 8672 levels (27th Jan). This could be negative signal for short term.

- The theory of Bollinger band (brown curvy bands) is also indicating a top reversal pattern in Nifty and signals a possibility of more weakness for near term.

- As per this pattern, false violations of upper or lower bands of Bollinger band have more often resulted in underlying returning to the middle bands in short span of time (previous few such patterns are marked in X).

- Hence, the recent false violation of upper Bollinger band around 8472 levels (on 27th Jan) is now opening the near term downside target for Nifty towards the lower band, which is now placed around 8400 levels.

Conclusion & Strategy:

- Today’s sharp decline in Nifty is suggesting a formation of near term top reversal, mainly ahead of Union Budget 2017, which will be presented tomorrow.

- There is a possibility of high volatility and the sector/stock specific sharp intraday swing movement is expected by next session. Nifty moving/sustaining below 8500 levels could have further negative impact ahead.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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