Good Morning!
Most of you who are following this blog would love to know
the answer today for the question: Is the correction that we are witnessing for
the past six months is over? We will definitely answer this by end of this
post. However, to start off with, I think one must have a better clarity on
correction and counter trend. If you were to watch a business channel and
listen to analyst’s appearing in different shows, tend to give different
numbers and differ in opinion. Some say, it’s a correction, some others would
opinion that the trend has changed and few others would say “adopt a wait and
watch policy as there is no trend”. It might be confusing for a person who do
not understand technical’s, and might be in a dilemma as to whose view is
correct.
I would say it’s the perception that differs among analysts.
With more than 10,000 indicators, numerous time frames which makes the chartist
to look at the same chart, different perception emerges. If you were to observe
analysts when the markets are moving one sided, they hardly differ in opinion.
The difference of opinion comes only at a time when we see a correction or a
counter trend is in place. And understanding counter moves becomes very
important. It’s because it can mean only one of the two options, either 1) it
can be a correction wherein you get an opportunity to re-enter or average; or 2)
it could be a change in trend which gives you an opportunity to exit the
current position and build new position on the opposite side.
Understanding counter moves are extremely important and am
going to make this easier by posting a lesson on it this weekend. For the time
being, let’s shift back to Nifty in action.
Nifty’s
Intermediate Outlook:
Looking at the move from 7940 in Nifty weekly chart, also
looking at the monthly chart and the daily chart, it’s clear that the
correction that we have been seeing in Nifty for the past six months is yet to
complete. Looking at the volumes especially delivery volumes of the underlying
stocks of Nifty, it’s suggesting the correction is not over. We usually see a
spurt up in volumes when the correction phase is done signalling smart money
re-enters or averages the current holdings. Also technically speaking, the
indicators RSI and MACD on the weekly chart still has more room to go downside.
How far downside? 8120 is one key number which am eyeing for the current
moment, wherein I feel the Nifty’s congestion zone begins.
Starting Thursday, we are starting with the daily outlook of
Nifty. Watch out for Nifty’s action on day to day basis.
Happy Investing!
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