Million Dollar Question from anyone right now is where can NIFTY stop & reverse. As all of you would be aware of the phrase "Don't Catch a Falling Knife" - Best time to buy would be when there is a reversal. Meaning the current period's candle starts trading above previous period's candle.
Lets quickly take a look at NIFTY's Monthly Charts.
Observations:
- The NIFTY has 2 trendlines intersecting at around 4450 levels. One of them is the Descending Channel's Bottom-Bottom Trendline & the other is the Rising Trendline (Lows of October'08-March'09).
- The second chart is on Fibonacci levels drawn from the lows of 2261 to highs of 6338. 50% retracement level comes in at 4292. 61.8% retracement is at 4778. So the new range for the index may well be 4300-4800 going forward for few months now.
NIFTY Monthly Charts
NIFTY Monthly Fibonacci Charts
Bottom Line: First thing would be for the Index to form a base the more time it spends forming that base the more stronger the next bull run would be. So even an six months to one year of trading in a tight range may well become a blessing in disguise. Last time this accumulation too took place for six months from Nov'2008 to March'2009 (5 months) before finally moving up decisively.
Remember this - It's always Darkest Before Dawn.
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