A simple yet powerful tool that I use every day in my
trading. It’s called symmetry. Symmetry in market means equality when comparing
swing in same direction. This technique helps me to project probable target or
reversal point on chart. In February after budget session NIFTY index took a
dip of 1219.65 points from top of 11171.55 to low of 9951.90. This time nifty
has been in a nice down trend from 5 weeks and it has headed a low of 10547.25
in today’s session. If we subtract 1219.65 points from recent top of 11760.20
then areas of 11540.55 are the probable support as per price symmetry.
However areas of 10540.55 are probable support areas and
reversal can’t be expected exactly from that same level but it can be used as
potential support area. On this chart I have drawn a horizontal line which is
connecting multiple highs and lows which is also a significant area and rising
trend line and horizontal line both are intersecting near 10460 zones which is
also a crucial point to watch out.
However, price has been staying below 200 days SMA on daily
chart which is almost equal to 40 days SMA on weekly chart showing bearish
trigger but to confirm a bearish trigger of MA cross we still need 2 or more
week’s stability below this SMA line to confirm change in longer term trend. Price
had entered below 40 weeks SMA in November 2016 and March 2018 but no follow up
selling occurred below those levels and market rebounded even after entering below
this SMA.
RSI in a well-established uptrend works best with new
concept which uses 80 and 40 as reference lines (overbought/oversold) for
uptrend and 20 and 60 for down trend. In an uptrend reading is considered
overbought when RSI is above 80 and considered oversold when it is below 40. As
per these facts now RSI is at 39.76 which is also showing oversold reading and
a recovery can be expected if bulls manages to protect 10450-10400 zones.
Based on charts and explanations above we can
simply assume that a short lived bounce up to 35% to 50% of current bearish
move can occur if 10450- 10400 zones remain intact. If bulls fail to claim
their presence near these areas then 10000-9700 on the down side can be
expected. Whereas recovery from 10500-10400 zones might bring 10910-11100 on
cards. Areas of 11100 will still remain challenging.
#NIFTY, #Sensex, #BSE, #NSE, #StockMarket #ShareMarket, #Stock, #INDEX #TechnicalAnalysis, #MarketTrend
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