Nity(5148.35): A gap up open turned out to be an opportunity to sell as the markets at close managed to breach even the Friday’s low by a slight margin.
The intraday pattern as at a stage where it is going to clue us in on the larger move for the next several weeks. In the chart above we are in the blue v wave. This v could end today closer to 5116, give or take a few points. If it does break, the next logical ending point for this wave is around 5045. However, what the markets does post the blue v is going to be more important. If Nifty follows the path shown from 5115 on the Nifty (blue dashed line), ie stays under 5205, the higher degree 5th wave should take Nifty closer to 5025 (red arrow). However if Nifty exceeds 5205, it is going to be a different play (we will come to that in the next post). So, if you are short, you might want to book profits around 5115 and reload closer to 5200 with a stop at 5206 cash or just hold with a stop at 5206 cash. However, if 5116 does not hold today, we have to assume that blue v will end at 5045 (need not be today).
Watch the INR – that is going to be key. Further weakness is not going to help stocks. If you have noticed, one thing that has been consistent over this results season – “Forex Losses”