Are you wondering what is going on in the markets? Why this is happening to me!!! I can't take it anymore, when will this blood bath end!!! In short, you were simply NOT prepared for such a market decline and now HOPING for a miracle...
Market took a magnificent slide and many got caught unguarded, also once it broke the MA(50) and MA(200) support the selling intensified further. Look at this as a teaching moment and if you indeed got caught unguarded then this is the time to learn and understand how market works. We already had a warning sign when market was near top at around 11800 area marked by red horizontal line.
Now let's understand how to identify a potential near term bottom. Is below chart providing any clues?
Now let's understand how to identify a potential near term bottom. Is below chart providing any clues?
- Market is near support area of 10000, but will it hold?
- RSI is in oversold territory and more important forming a subtle divergence as market made new low
- MACD is also forming subtle divergence
- PPO is below -5 territory suggesting a possible bounce in coming weeks and also forming subtle divergence
Weekly Nifty chart also suggest that market is at a support area and further decline is less likely. RSI is also very close to oversold area, however MACD and PPO are not providing much of a clue.
We expect market to experience a near term bounce but bounce does not mean everything will be back to normal. markets take time to establish a bottom.
Possible outcome:
Good Luck!
Possible outcome:
- Everything is great: Market bounces of the support area and starts another massive BULL run and in couple of months manages to make ALL TIME HIGH. Very optimistic scenario and markets seldom provide such predictability.
- Things will turn ugly: Market undergoes a bounce and forms the right shoulder (reaching close to 10900-11000 area in couple of months (we can call it year end rally). As soon as everyone becomes bullish, market takes the turn for the worse and catches everyone off guard again but this time anyone who did not learn the lesson will bear massive pain. Eventually support zone will break and market will drop all the way back to 9000 support area.
Good Luck!