Market continues to find support and currently hanging near lower end of the channel. How long will it continue to remain in range bound action!!! Just be cautious, BUT WHY?
What can you find out from below chart?
- Nifty barely hanging above MA(100) and MA(100) is well above MA(200) while trending higher - giving benefit of doubt to BULLs
- McClellan Index well below EMA(59) and trending down - suggesting to be cautious ahead
Dotted lines exhibit a channel in which Nifty is moving for several months now, currently trying to find support near lower end of the channel. If market breaks the channel then next support is near 7600-7800 area, however a bounce from lower end of the channel cannot be ruled out. BUT lets not forget recent RED HIGH volume bars (lower end of the chart) in recent days also known as distribution days.
The range bound action is very evident in below weekly chart. Long bottom tails suggest a possible bounce from current levels.
Any time market is at lower end of the channel, that would be low risk entry. However, as soon as the channel is broken to downside then you have to exit the market ONLY then you cap your losses and that's how it becomes low risk entry. Also take a note of distribution days which are flashing caution signal on daily chart.
What does it mean for our Investments?
Market continues to give benefit of doubt to BULLs but remain CAUTIOUS...
What does it mean for our Investments?
- Mutual Funds - If already invested in the market then continue to remain invested, also no need to stop SIP. If in cash/FDs/liquid funds then this could be your low risk entry if market turns around, however be ready to pull the plug if market breaks the channel to downside for those who entered the market now.
- Stocks - ONLY invest in strong patterns with good risk management. You might want to check our trade size calculator which can help you manage your risk per trade. Also check our watch list as some of our picks have done fabulous.
Market continues to give benefit of doubt to BULLs but remain CAUTIOUS...