How to Trade Nifty this month – A detailed analysis.
So, another hectic month ends, lashing out trades on both sides. Since last two months there has been a spike is the NSE VIX have raised and have been trading above 19 levels, previously these levels were noted during September 2015. The over all market structure remains positive. Lets have a look at the monthly, weekly and daily charts of Nifty.
On the monthly charts Nifty has formed a “bullish harami” pattern. This pattern implies formation of base/ stalling of selling activities. Notice the positive reversal on the RSI (bullish formation), this PR provides a target of 11950 for Nifty spot charts! The volumes on the composite formation have been good, implying actual buying have taken place in the index. The monthly pivot is placed at 10750 levels. Monthly closing above it will ensure the targets of 11950 in the months to come. 11160 – 11450 are minor resistance on the monthly charts. In short the overall picture on the monthly charts are not bearish at all!
The weekly charts are bullish, the appearance of a BULL SASH candle above the 50 SMA is an indication of strength in the index. The RSI took support near the 50 levels and pulled up. The volumes on the last white candle is good. 10790 will act as an important levels on weekly basis for the index. If a weekly close above it maintained the weekly targets are set at 11090 – 11300 levels! Hence on the weekly charts too there is no signs of weakness.
Now lets drop down to the DAILY frame and analyze Nifty. Well no surprises the most talked about pattern has formed on the charts “THE DOJI”. Whenever I read through the analysis posted on various social media channels and see analysts claiming the doji a bearish pattern it gives me the rofl feeling. Doji does not indicate bearishness, rather it is an indication of a pause! After an extended move the bulls are taking some time out. The Nifty is above 200 SMA, the volumes on the doji are not that great. The monthly and weekly charts are bullish, in short there is very remote chances of any bearish implications.
The chart formation (refer below) is one of my favorite one, it gives good measured moves once broken out. The pattern target stands at 11400 levels!
In short there are very remote chances of a meltdown or a deep correction as of now. The 10700 – 10800 are strong support levels on the daily, weekly and monthly frames. The minimum target for the move up is set at 11400. Would also like to mention that 3rd – 4th December 2018 are “high time” confluence zones for Nifty. Generally in these time conditions some good “trend decider” moves takes place. Though the overall picture is bullish, the inherent market risks should not be ignored.
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