Bears have taken over!
As mentioned in the previous issue of the Daily Game Plan…
It’s the narrowest range of the last four days which shows indecision. Range contraction is usually followed by a trend day most likely on the downside.
Nifty has also put up a Bear Hook pattern at the resistance of 11550. I have circled some of the similar days when this pattern appeared. Observe the subsequent price action over the next 1-2 days. The break below today’s low at 11507 will be negative.
On the hourly charts, the Nifty has broken the flag pennant pattern on the downside.
Nifty Bank on the other side has traced out a Bearish Engulfing pattern on daily charts. The break below 23385 will take it down up to at least 23050.
So putting all things together, it looks like we are going to at least 11300.
Please be cautious!
I have been cautioning readers for the last two weeks that the markets are tired and ripe for a healthy correction.
Nifty corrected by 1.68% on Friday and 2.69% for the week. The Nifty made a low at 11303 before settling at 11333.85.
So where to from here on?
Well, Nifty has established a Bearish Engulfing pattern on weeklies which definitely suggests that the intermediate top is made and there is going to be more weakness going ahead once we are below 11300. I have marked similar patterns that occurred at the previous tops and you can observe what has followed after that.
I believe we’re going to test the August swing low at 10882 where the all-important 200 Day MA is also placed. We might see some intra-week rally up to 11507 where there’s a gap to be filled but the rally could be short-lived.
Nifty Bank has also managed to close just above the important support at 23000. Nifty Bank is oversold on short term oscillator but the upside is limited up to 23451 or so.
All eyes are set on the Supreme Court verdict on the debt moratorium scheduled to be announced on 10/09/20.
The outlook remains negative!
Here’s the list of the most oversold/ overbought stocks based on my Swing Trading Model. You can choose to enter on an intraday pullback/rally of 2-3% from the previous close.
As you can see the Banking stocks are quite oversold while Vodafone Idea still remains overbought as per my system. I already have an open position in Axis Bank at 465.4. Let’s see how it fares going forward!
Do check out the real-time performance review for the week updated yesterday.
Have a profitable day ahead!