Nifty In Technical Charts: Towards New Highs Again?

Nifty In Technical Charts: Towards New Highs Again?

The line titled ‘Stoploss for Investor’ managed to hold the sharp decline of Oct. 23, from where the Nifty future has had an almost continuous advance. Many times, simple techniques are all that is required to play the market well. That stoploss line came up, at a certain Gann angle from the March 23 lows and caught the largest recent dip and stopped it dead in its tracks.

As an update, I have now added a pitchfork to this chart and we note that the prices, as of last week, are all set to cross the upper channel, implying further gains are possible from here too. I have also indicated the median line of this pitchfork as a possible new stoploss for traders. This is currently at 21,050 levels. Note however, that the stoploss for investors continues at the same former stoploss line—which has now worked its way up to 20,000 levels and that this line is quite close to the lower channel of the pitchfork too, making it a decent cluster.

I had used the 1-bar swing chart of Gann to define a swing low support in the last couple of letters. It remains undisturbed as yet and the last week’s limited price action could only create a near-term swing low at 21,501, while the second swing behind continues to remain at 21,060. Remember that based on this method, we use two swing lows behind as a trailing stop. Now, note above that the median line of the pitchfork is also at the same level. So, traders should definitely use the 21,000 levels as a short-term trend inflexion point.

Just another word on the pitchfork channel. In a rising channel, it is the break of the lower channel that signals a possible change in the trend. Note in the chart above that the prices are actually crossing the top channel. This tells us that the trend is still quite strong and not really in a mood to reverse.

There are many who are looking at valuations and opine that the market is much overbought and that should bring about a meaningful correction. But that is a limited view of the market, because a 360-degree of the market should involve valuation along with the levels of liquidity present in the market as well as how strong the ruling sentiment is. The sentiment decides how much of risk people will take or not take. The liquidity factor will ensure how far the prices shall fall during a reaction.

Right now, while one of the factors (valuation) may be getting stretched, we are all aware that the liquidity pouring into the market is immense and there is continued growing risk-on sentiment still. Thus, only one part of the market may be off and that too may mitigate if the expected growth ahead in 2024 comes through. No wonder the market trends continue to plough ahead.

Let’s take a look at the momentum factor. Chart 2 shows the weekly chart with the RSI. Straight off, we can note that the indicator is still ensconced in the overbought region. So, no signs of trouble yet. Some stalling, perhaps, but that is not a reversal signal.

#Nifty #Technical #Charts #Highs

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