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The markets started the week weakly and lost more than half a percent in continuation of the prevailing correction phase. Weak global cues triggered a gap-down start followed by volatile swings to the end. Finally, the Nifty ended at 16,310 levels, down 0.6%. Indian equity benchmarks slid to fresh two-month closing lows on Monday, trailing losses in global equities amid concerns about rising interest rates and the impact of a tightening lockdown in Shanghai on global economic growth. Oil & gas, financials, consumer and metals stocks were the biggest detractors for both benchmark indices. The Sensex fell as much as 917 points during the session to 53918 and the broader Nifty slipped as low as 16142, down 269 points from its previous close. Those were the lowest intraday levels since March 9th. We saw no respite in global markets, particularly in the US, and largely reflected the same trend on our side as well. Also, mixed Q4 results add to the further negativity. We reiterate our view that we will focus on increasing short opportunities until we see signs of a reversal. On the index front, the 16050-16000 support in Nifty is intact and the 16500 -16600 zone would act as an immediate hurdle. Nifty closed with a green candle as the market recovered from the lows. The entire pullback from 18100 is in three legs, a classic AB=CD pattern is formed and if we take the entire price action from the March 2022 low. The pattern in play is a Gartley 22 XABCD pattern. Gartley 22 is a harmonious pattern and indicates temporary trend exhaustion. The typical target for Gartley 22 is a 38.2 retracement from the high. This gives us a minimum target of 16900 which can extend to 17400. Also, the Nifty has formed a bullish harmonic pattern that indicates a quick recovery in the markets. Nifty is currently in a key support zone and is stabilizing in this zone. Nifty needs to trade above 16450 to establish a short term bottom and propel higher levels. Support for Nifty stands at 16050-16000 and if Nifty breaks below 16000 a drop to 15800 is possible. Nifty is in an extremely oversold state and it is very likely that the markets will start a sharp reversal from here. Avoid being heavily on the short side of the market.
Resistance: 16200, 16500, 16700
Support: 16000,
15800, 15600
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