Bottom Line: We are in last leg of the first correction of our multi month Bull Run. We will not enter Bear trajectory until Nifty breaches and close below 6580 for three consecutive days.
Mr. Market loves to play fool around with Bulls Bears and all analysts. This is what we stated last week and here he goes. Now Nifty is marching towards filing up the hard gap that we have witnessed in the month of August. What next?
Even before we discuss what next, I wanted to discuss something i think is more important to read before analyzing markets. The topic for discussion is "Looking at the chart at different angles (time frame) ". Someone asked me this over the weekend, what would be done if different time frames gives different outlook. A very good question, I said now you have started to learn analyzing markets. Why? Unless a person looks at the chart in different time frames he is not going to understand what is happening or rather understand what is going to happen in the coming sessions. Contradictions on the outlook looking at different time frames would be there and it has to be there. It is the duty of analysts to synthesis the chart in totality after considering all possible angles.
A minimum of 3 different angles needs to be looked into always, then needs to synthesis even before jumping into any conclusion. Let's say I look into monthly, weekly and daily chart. Consider it is like film. The Monthly chart gives me the main picture. The weekly chart is something like reading a plot or looking to the film review or ratings. And the daily chart is like a trailer. Obviously, can you conclude saying a film is good or bad purely based on looking at a trailer? No, similarly the case goes with film reviews or reading the plot. The plot might be more or less with most of the other films, however if we need to conclude saying a film is good or bad, we need to see the film completely. That is why a monthly chart acts as an important chart than in any other to understand in totality. Similarly the daily charts as this chart summarizes the entire day's event. It acts as an engine as to whether you want to look into a film or not.
So that was a little story. Now back to business. Nifty daily chart has turned neutral from negative. Intermediary (Weekly) chart still remains neutral while Monthly (Main Picture) chart still remains bearish. Nifty can march ahead in filling up the gaps even before turning down. With no signs of turning up in monthly chart, it would be hard to believe the correction that we are witnessing would be far from over.
Stay tuned am updating the charts.
The key levels to watch out for on the upside are: 8225 (21st August Low) and 8359 (20th August Low) as these marks the start of hard gaps.