CNX-NIFTY
Open-11382--High-11384.80—Low-11175.05—Close-11201.75
on 28.2.2020
Support: 11171.55/11108.30/11090—60/10995—987—985/10782/10746/10670/10637.15.
Resistance:11223/11234.95/11250.20/11311.60/11322.11/11358.22/11393/11416/11461/11490.75/11549.10/11589/11625.
After making an all time high of 12430.50
on 20-1-2020 it started correcting and made a bottom at 11614.50 on 3-2-2020
just after the Union Budget and thereafter it went up again up to 12246.70 on
14.2.2020 and started correcting again and broke the bottom of 11614.50.
It has been falling relentlessly for the
last six days and has broken its important support levels in the process. Furthermore it has broken its short, medium
and long term moving average decisively and certain moving average combination
has given negative crossover also and some are on the verge of it, which is bad
sign. The RSI indicator is also showing huge negative divergence on daily,
weekly and monthly chart and similarly the MACD is also in sell mode on daily,
weekly and monthly chart, so technically it has weakened and indicates that the
further fall may be ahead.
Its long term moving average range on
daily chart is between 11875 to 11625 for 2.3.2020 (it changes every day) and
on the weekly chart is between 11063—10938---10788 (it changes every day). Since
it has fallen for six straight days so it may possibly make a short bottom any
time and stage a pullback rally from its crucial support point at
11171.55/11090—60 & 10995.82--938 else it could go down further and may
break major bottom of 10637.15 it made on 23.8.2019. Please note that if it
gives a pullback rally then the possible exhaustion points could be at 11358.22/11489/11589
& 11625 and the in between stiff resistance points are at 11250/11322.11/11393/11461/11490.75/11549.10/11591.70. As you are aware that the pullback rallies are treacherous in nature
therefore it can end abruptly also at any of the above mentioned points. The ongoing
down move looks to be impulse in nature, so it seems that it is going to
continue for some time, therefore the pullback rally may not be strong one.
It will show sign of slight comfort if it
moves and sustain above its long term moving average lower band i.e.11625 (it
changes every day) and will gain strength if it moves and sustain above its
upper band of long term moving average i.e.11875(it changes every day). It is
important to note here that if it doesn’t bounce back and sustain above its
long term moving average lower band in few days then it can slip into the bear
market and that would be very painful.
In view of the above observation it is
suggested that long trade should be avoided as of now but those who wish to
take advantage of the pullback rally may try long call at or near critical
support points of 11171.55/11090—60 & 10995.82--938 with proper stop losses only. Kindly note that it
could be a risky trade so be vigilant to trail your stop loss in profitable
trade. Since down move is on so sell on the rise would be a better option. The
possible sell points could be 11322—11358/11440—490 &11549—590 or earlier also
(refer resistance points above) please put proper stop loss in your trade and
here also trail your stop losses in a profitable trade to avoid loss.
Remark: - The long
term uptrend is threatened as it broken important support points and is well
below its all long term moving averages and if it sustains below it for some
time then the down move may accelerate and it may seek much lower levels in
coming days/weeks. Therefore for safe traders it is suggested to avoid long
trade completely till it moves at least above its long term moving average lower
band and sustain. But the aggressive trader can try long call as suggested above,
but I once again reiterate that it could be a risky trade. The down move is on therefore
it is suggested to adopt sell on the rise strategy till it gives visible
indication of bottoming out. The bias is hugely bearish as of now.
Disclaimer:-The
view expressed here are solely of the author and he is not at all responsible
in any way for the outcome of the trade you enter based on the above view.
Kindly
note that make your cost your stop loss in favourable trade and then trail
it as the price move up/down to gain maximum profit and avoid losses. Use
support and resistance levels as entry, exit, target and trailing stop loss
points. DO NOT TRADE WITHOUT STOP
LOSS.
Note: Price stated here is of spot market.