Market could not hold onto its MA(200) and down trend continues as expected. But lets understand how far this correction can extend so we can be prepared for it...
Nifty is below MA(100) and MA(200) and any further downside action will eventually force MA(100) crossover with MA(200) on down side. However, McClellan Index appears to be turning the tide slowly yet remaining below EMA (59).
Daily chart below shows that Nifty could not overcome MA(50) resistance and eventually broke down below MA(200), currently sitting on the support area at 8100 level.
Weekly chart below suggest that, the Head-Shoulder pattern might be completing and as soon as market breaks below 8100 area, it will be confirmed. The right shoulder appears to be smaller in height compared to left shoulder which is not that uncommon. RSI is well below 50 mark, however NOT yet in oversold territory while MACD and PPO are in down trend.
We speculate below Nifty action in coming weeks/months ahead... be prepared for a roller coaster ride...
The Head-Shoulder pattern appears to be unfolding slowly, hence we can expect a roller coaster ride in coming months ahead. It is better to be prepared than taken by surprise and avoid massive losses. This would be ideal time to find next set of possible winner in stock market when the market correction is over...
What does it mean for our Investments?
Market correction continues hence be alert...
What does it mean for our Investments?
- Mutual Funds - If still invested in equities then this is your last chance to get out else stay invested and ride the correction which could take a while, be patient. But it would be wise to STOP SIP for now until market stabilizes. If in cash/FDs/liquid funds then wait for next robust opportunity, NO need to hurry.
- 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 correction continues hence be alert...