NIFTY - a likely reversal?
The last few days have been eventful, scary and nail biting all at the same time.
A double whammy hit the Indian business and financial environment as Trump won unexpectedly in the US election and our PM demonetized the Rs500 and Rs1000 notes , which formed about 86% of the currency in circulation. The days following the announcement were volatile for the markets.
This tempted me to check the long term structure of the market to get a broad understanding of what is likely in coming weeks and months.
An analysis of the weekly price charts of Nifty is equally scary and nail biting. What is clearly visible is the formation of a classic textbook ‘Double Top’ on the Nifty as it tests the 9000 levels twice in the past few months. The fact that the markets failed to break the 9000 barrier is indication enough that the big players are not bullish.
However a reversal of the long term trend would occur only below 7000 levels. Before that we have support at 7900 and 7400. How the fundamentals play out when markets test these crucial supports will decide whether we enter a medium term bear market.
I am sure those who have undergone my ‘Technical Analysis’ workshop would have already evaluated this, even before the events of 8th November. Long Term Investors may have to wait for entering the markets at appropriate time. Till then a trader mindset will rule.
CA Rajiv D Khatlawala
Author, Consultant, Trainer
(Disclaimer: These are my personal views. Please take your own decision while investing. The author cannot take any responsibility for any action taken by readers. )
