Market tried to rally for past two weeks and had a real shot to change the recent downtrend. But as we expected, market could not hold above 8500 level and immediately gave up. Now what shall we expect!!!
Nifty back below MA(200) suggesting time to be very cautious, however McClellan Index continues to remain above EMA(59) suggesting a possible change in direction. This chart is giving us mixed signals.
As we expected, 8500 resistance proved to be quite strong. Nifty did a fake breakout and dropped back into range and now below MA(50).
Weekly chart is providing a subtle clue, watch out the last bar with a red top tail. This is often a sign of further downside, not guaranteed but very probable. Also RSI is below 50 mark, and PPO appears to be dropping below zero mark.
Charts are telling us to be cautious as market could not hold above 8500 level suggesting further probable continuation of downtrend or range bound action.
What does it mean for our Investments?
Market back into range, stay cautious...
What does it mean for our Investments?
- Mutual Funds - If still invested in equities then stay invested as market might remain range bound for a while. If in cash/ FDs/ liquid funds then wait for next low risk entry.
- Stocks - ONLY invest in strong patterns with good earnings guidance and DO NOT forget to have STOP LIMIT on open positions. When market is in correction, it will drag everything down with it. Check out our trade size calculator to manage your risk along with potential buy candidates watch list.
Market back into range, stay cautious...