Market is undergoing correction which was expected based on breadth charts we examined last time. Let's understand how much pain is ahead! Can charts provide any clues? Let's check out...
Daily Nifty chart is telling us that market has broken down below 50 day moving average which is not a good sign, MACD has dropped below zero mark suggesting more pain ahead of us and RSI is reaching oversold levels.
Weekly Nifty chart has not changed much, as divergences are still in place and now Nifty is following in the direction of divergence. However, RSI indicator is reached oversold levels.
Nifty advance decline line is downward trending which is not good for the markets.
No. of stocks above their respective 50 day and 200 day moving averages is trending down which is also not good fort he markets.
Chart observations:
Market in correction mode for now.
- As expected, market has entered in correction mode
- We might not be done as charts are telling us that more stocks are declining than advancing
- We might see a short term bounce as RSI on daily and weekly is approaching oversold levels
Market in correction mode for now.