A BROAD TECHNICAL VIEW ON CNX-NIFTY FOR THE WEEK STARTING FROM---8.6.2020

CNX-NIFTY

 

Open-10091.80--High-10177.80—Low-10040.75—Close-10142.15 on 4.6.2020

 Support: 10137.85/10033/10004/ 9970.80/9944.40/9889.05/9700/9685.55/9600/9580/9475/9390.31/9327.85/9299/9220/9158/9141/9131/9116/9090/9038.90/9000/8967.23/8900/8860/8842.28/8801.14/8672.07/8617/8555

Resistance:-10178.95/10276.20/10333.85/10417.80/10490.95/10551.20/10557.70/10637.15/10670.25/10782.60/10941.20.

Weekly Range:-10177.80---10046---9970.80---9944.40---9706.95.

Most critical point for the year:-10583.65.

(Bold and underlined figures are most important)  

 It almost gave 600 points rise in the preceding week. It did give small correction yesterday but resumed the up momentum again today and closed above some of its long term moving averages also, which is a good sign. You are already aware that it has opened the upside up to 10551.20(see my post for 5.6.2020) and sustain close above this mark will open the upside up to 11270---11536 levels. It is exhibiting tremendous strength on the technical chart and it has also crossed the bear market threshold point of 9944.40 decisively which indicates further up move ahead. But it is important to mention here that the recent price surge is not in sync with the fundamental which is most surprising and does not give enough confidence to the traders in the ongoing up move. But the technical parameters are good, so further rise seems inevitable whether one likes it or not, so ride the rally till it shows visible sign of weakness. Since the price movement has total disconnect with the fundamental and it is a liquidity driven rally therefore sooner or later price has to rationalise because it is the fundamentals which holds the price line eventually. So be careful that this rally can trap the traders unaware at higher levels.  

In view of the above observation short term trend looks strongly up, therefore long trade can be tried on dips or otherwise too but moving up it will face stiff hurdle at 10188---10240---10385---10485---10551---10583.65---10685---10750---10830---10875---10965---11065---11245—270---11536, sustain close above 10583.65 will definitely speak of much strength and can take it higher therefore this is a very significant or threshold point. But as this is a technical and liquidity driven rally and has no connect with the fundamentals so this rally can culminate also at any of the above mentioned points, so be alert, vigilant and cautious in the long trade because the day correction sets in it could be devastating. Similarly moving down it will have strong support at 10046---9970.80 &9944.40, sustained break below 10046 would be an alert sign and sustained break below 9944.40 on the closing basis will indicate that it could go in for deep correction. I suggest that since it is technically strong now therefore do not try to go for instinctive short trade but one should definitely attempt short trade at the critical range or on the price breakdown.   

NOTE: - If it opens up with huge gap up then wait for it to settle down before initiating long position. But short trade can be attempted on huge gap up if it is near the selling point. Since, it is showing volatility so any type of trade should be squared off during the day, if you don’t have reasonable profit margin in the trade.

 

TRADING STRATAGY

1. Buy on decline near but not below 10046 with a stop loss of 9930.

Or

   Buy if it maintains above 10178 for some time with a stop loss of 10100.

2. Sell on the rise near or within the range of 10385---10485----10583 with a stop loss of 10620. Traders should use self defined short stop losses too at respective points because the short term trend is up. The authentic stop would be 10620 only.

Or

Sell if it does not move above 10178 in first two hours of trade with a stop loss of 10220.

Or

Sell if it maintains below 10029 for some time with a stop loss of above 10080.

Or

Sell if it maintains below 9944.40 for some time with a stop loss of above 10060.

Remark: - The long term trend is still down. The Short term trend is strongly up so long trade can be tried as suggested above but with extreme caution as the ongoing up rally is not fundamentally backed therefore chances are that it may end abruptly also. Therefore short trade should also be attempted as suggested above. The short term bias is up.    

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 are of spot market.

 

Contact me for strategic guidance to enter and exit trade.