Sell off in Nifty

Nifty has broken a major support of 5180 and sustained below that level, so as I mentioned earlier we must exit our long positions. Nifty broke its previous High (5344) and made a new high of 5398 but came down sharply from that level. We consider this as a false breakout as volumes were not much on breakout. But this is not the case in last week’s sell off. Nifty came down with good volumes and open interest was also increasing. Now any bounce back should be considered for exiting long positions.

Next week I am expecting nifty should take a support around 4930 and will give a bounce back from that level. Major resistance will come around 5130 and then around 5200. If nifty comes around 5200 one can go short with keeping stop loss above 5350.



Since last few months Nifty is making higher highs and higher lows but the momentum indicators are giving negative diversions which suggest this is just a bounce back of major sell off ( Sell off from 6300 to 2500). We will get the confirmation of major trend reversal only if Nifty makes lower low i.e. Nifty goes below 4667. If Nifty goes below 4667 then we may see a huge sell off in Nifty in next month or two. In that case Nifty may go down to 3700-3800 level which is the Gap yet to be filled on the chart.




To conclude, any bounce back must be used to exit long positions and go short around 5200 level with stop loss above 5350. Happy Trading!!!!!!!!!!!