Technical Analysis of Indian Equities by Nooresh

Nifty Cracks 400 points –What Next ?

Nifty in last few months.

  • Nifty had a one way move from 11550-11600 to 13770 without a 3% dip from peak to bottom.
  • Everyone had been looking at a pause or a crack and the market kept overshooting.
  • This is my post in early November - Nifty50– 12800-13000 a Pause or a Top ? 
  • We did see a pause of a couple of weeks around the 13k mark and then we ramped up to 13770. Even after the crack yesterday we are still at 13300.

Nifty Technical View.

Nifty Cracker

  • In the chart above have highlighted the last 3 big down candles.
  • The first down candle on 31st August saw a recovery of 3-4 sessions and then a slow sideways move and then a test of 200 dema.
  • The second candle on 15th October also saw a recovery of 3-4 sessions and then sideways and then a test of 50 dema.
  • The 3rd candle actually saw a full recovery and Nifty started a fresh move.
  • Nifty has deviated a lot from the 200 and 50 dema. So are we going to see a test of 50 dema or 200 dema? Yesterdays sharp tick has also seen RSI drop from 80s to 55-60.
  • Technically such steep sloping moves do not lead to a quick crack. Check this video done in September

What Next ?

  • Like previous times we could see a 3-4 day recovery and test 13450-13600 zone. Generally 50-70% of the downtick could be recovered.
  • A dip below yesterdays candle would open up a move to test the 50 dema at 12700-12800 which is also the cluster of pause in November.
  • We could continue to see stock specific action in midcaps/smallcaps just like we saw it in previous down candles.
  • Time to avoid leverage and look to increase some cash on the bounce and not to put new money now.
  • Will review again at 13100 crack or 13700.

Nifty by Smallcap

  • A move beyond 13800 in less than 4 sessions would imply we are back into momentum. Not in that camp.

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Article by Nooresh Merani

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{ 1 comment… add one }
  • Anbarasu December 22, 2020, 11:04

    Hello Sir,

    Absolutely superb analysis as usual, Please post some information about for accumulation of shares from mid cap and small cap segments..

    Thank you in advance.


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