Price pattern shows short-term bottom is in place
ET CONTRIBUTORS|
Mar 12, 2018, 11.18 AM IST
By Jay Thakkar
Where are we: For this month, the 200DMA will act as a crucial support for the Nifty and till those levels are held, the index will either consolidate or continue to bounce back and retrace its recent fall.
What is in store: Momentum indicator MACD — both on the daily as well as weekly charts — is in a sell mode. So, there isn’t any confirmation of a reversal from down to up from it. However,the price pattern indicates the short-term bottom is in place and the bulls are likely to take the Nifty again towards 10,350 to 10,400 levels to test the breakdown levels.
What could investors do: We think that currently the index might have completed a short-term correction till its 200DMA and may bounce back from the psychological levels of 200DMA. The international markets will also help the Index in the the short term to bounce back till at least 10400 to 10450 levels. However, once this bounce-back is over, the index will again decline towards its short term as well as medium term target of 10,000 to 9,900 levels, respectively. Hence, the positional trades should not get over-leveraged on the long side at current levels or even if the markets bounce back, because once this bounce is over, the next leg-down will begin. Long-term investors need not panic with this kind of intermediate correction as it’s a part of a long-term bull market.
(The author is AVP-Technical & Derivatives Research, Anand Rathi. Views expressed are personal.)
Where are we: For this month, the 200DMA will act as a crucial support for the Nifty and till those levels are held, the index will either consolidate or continue to bounce back and retrace its recent fall.
What is in store: Momentum indicator MACD — both on the daily as well as weekly charts — is in a sell mode. So, there isn’t any confirmation of a reversal from down to up from it. However,the price pattern indicates the short-term bottom is in place and the bulls are likely to take the Nifty again towards 10,350 to 10,400 levels to test the breakdown levels.
What could investors do: We think that currently the index might have completed a short-term correction till its 200DMA and may bounce back from the psychological levels of 200DMA. The international markets will also help the Index in the the short term to bounce back till at least 10400 to 10450 levels. However, once this bounce-back is over, the index will again decline towards its short term as well as medium term target of 10,000 to 9,900 levels, respectively. Hence, the positional trades should not get over-leveraged on the long side at current levels or even if the markets bounce back, because once this bounce is over, the next leg-down will begin. Long-term investors need not panic with this kind of intermediate correction as it’s a part of a long-term bull market.
(The author is AVP-Technical & Derivatives Research, Anand Rathi. Views expressed are personal.)
