TECHNICAL VIEW ON CNX-NIFTY---2.3.2020

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.

Contact me for strategic guidance to enter and exit trade.