Weekly Market Recap
Last week, I stated that NIFTY formed a sort of ascending triangle and gave a solid breakout followed by next day rally. This week market started-off with cascading fall, consequently eroded all the previous week gain and remained traded at the lower end of the range though out the week.
In the week gone by, the benchmark SENSEX was down by whopping 2074 points, or 6.16% to close at 31642, similarly, NIFTY plunged 608 points, or 6.17% to close at 9251. While BANKNIFTY underperformed significantly with a loss of over 10%.
Current Outlook
In the event of upside breakout market becomes easy to buy, but at the same time it is unequivocally harder to sell when breakout immediately, especially in the next consecutive opening session proved out to be a failed event. As I mentioned in last note, false breakouts are often followed by above-average price trend in the opposite direction of the original signal. This week is the classical example, where temporary joint upside breakout is followed by a nasty decline.
Although, it was a significant decline this week, still there is good scope for bulls, as even after the big one day fall price has so far been contained at same level as there is no follow through in decline. Furthermore, technical indicator’s configuration at below panel in the chart are looking propitious for bulls as they are rolling up again from the middle of the range while in last three sessions NIFTY remained unchanged. This is supposed to be the solid configuration as shown in the chart below. So, as long as NIFTY stays above this week’s low there is a good chance, we can expect some rally towards last week high.
On the other side, the sharp advance in NIFTY from the march low has taken a shape of rising wedge which favour the bears and this week false breakout converted into the breakdown substantiate the fact. So, as long as price stays below the wedge, it is somberly pestiferous configuration that normally resolve with decline in prices. As of now, both bulls and bears are exerting the price towards each other. Need to wait to see who thwart others attempt to be the conquistador. Hence, outlook is tangled amid cryptic and mercurial behaviour.
Conclusion
At present, given configuration is bifurcated for bulls and bears, however, long-term trend has turned down that is biased for bears. Moreover, bear market rallies are full of embezzlement which can unwittingly cripple down the buyers as it is easy to buy, but harder to sell.
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Be Patient…!, Be a Savvy Investor..!!
Pankaj