NIFTY View

Are we moving towards a NEW HIGH?

Nifty Weekly
The above chart is a weekly one of Nifty. As indicated, the index is forming a reverse H&S pattern which means that this will be a bottom for the index and breaking and closing above 6220 will mean that Nifty is ready for it's journey to new highs. Ofcourse, this will be over the course of months. We believe that these are early signs of the end of the 3.5-4 years long consolidating bear market and some cheap undervalued stocks can be picked up by the long term investors in the smallcap, midcap and bluechips. As the reverse H&S pattern has been forming for over 2 years, it will be a strong rally. Agree, the analysts are very bearish and have targets of 4800-4000-3000 and so on but the first stage of a bull market is when noone believes that we are in a bull market and fundamentals are still weak and the news still gloomy.

Bank Nifty
The above chart is that of BANK NIFTY. The falling blue trendline has broken and has created a bullish trend in Bank Nifty for medium term. The targets come up to 10750-11800-12200. The support for BNF exists at the 34MA. As long as BNF closes and stays above the 34MA the bullish environment will continue.

CNX AUTO
The CNX Auto is forming a reverse H&S pattern which is just a rough H&S pattern. Once the Auto index crosses and closes above 4750, the Auto index will see a good rally in the coming days. If however, the 4750 doesn't break, the downside target which the index can see is 4150 and 3900.

Having said, it will be foolish to be blindly bullish. Nifty is at levels where it has come and fallen 15%-20% quickly in past many occasions. As we say, it is always better to take each day, week and series as it comes.
"Markets can stay irrational more than you can stay liquid"
 Our view might be correct, but our trades have to always be with the market trend otherwise, our entire capital can be wiped out in the volatility.
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