Nifty slide below 10,398 could confirm inverted pennant
ET CONTRIBUTORS|
Feb 19, 2018, 10.11 AM IST
By Sameet Chavan
Chief Analyst, Technical & Derivatives
Where are we?
On all four occasions during the truncated week gone by, our markets opened higher but mostly the picture changed as we approached the closing point. The intra-day volatility seems to have increased and this is what we call it as ‘choppiness’. At the end, the market did not go anywhere as we saw few false breakouts from intraday range on either side.
What is in store?
On daily chart, we can see a formation of an ‘inverted pennant’ in the making. A slide below 10,398 would confirm the ‘inverted pennant’ pattern and then we can expect retesting of 10,200 – 10,033 levels in days to come. On the flipside, a move beyond higher end (10,650) would provide some relief rally; but it certainly does not change the ‘sell on rise’ strategy in the near term as we are yet to see a complete impact of the ‘bearish engulfing’ pattern formed during the antepenultimate week.
What could investors do?
Traders are continuously advised to remain light and should ideally avoid any kind of bottom fishing in the near term. In between we are likely to see some bounce backs; but this time, a possibility of these rallies getting sold into is quite high. Considering the distortion of weekly and probably the monthly chart as well, we consider this as a corrective phase of the entire rally seen from December 2016 lows. Hence, it is fair to accept that we may not be able to see new highs at least for next few months.
Chief Analyst, Technical & Derivatives
Where are we?
On all four occasions during the truncated week gone by, our markets opened higher but mostly the picture changed as we approached the closing point. The intra-day volatility seems to have increased and this is what we call it as ‘choppiness’. At the end, the market did not go anywhere as we saw few false breakouts from intraday range on either side.
What is in store?
On daily chart, we can see a formation of an ‘inverted pennant’ in the making. A slide below 10,398 would confirm the ‘inverted pennant’ pattern and then we can expect retesting of 10,200 – 10,033 levels in days to come. On the flipside, a move beyond higher end (10,650) would provide some relief rally; but it certainly does not change the ‘sell on rise’ strategy in the near term as we are yet to see a complete impact of the ‘bearish engulfing’ pattern formed during the antepenultimate week.
What could investors do?
Traders are continuously advised to remain light and should ideally avoid any kind of bottom fishing in the near term. In between we are likely to see some bounce backs; but this time, a possibility of these rallies getting sold into is quite high. Considering the distortion of weekly and probably the monthly chart as well, we consider this as a corrective phase of the entire rally seen from December 2016 lows. Hence, it is fair to accept that we may not be able to see new highs at least for next few months.
