NIFTY monthly view June 2020Dear traders,
I had posted my monthly view on March 27
Now things have moved enough to create a monthly view for June.
There are two things I want to mention which I try to tell myself every single day
Technical Analysis if just a way of logical thinking and deciding your own course of action amidst market uncertainty. These lines , averages and indicators are there to keep your emotional mind in check when the market makes random movements. Market defines these lines, it does not obey these lines.
There is no point in making predictions and certain about it, but there is a lot of value in developing an independent view based on your observations and loosely adhering to it.
This is my monthly view. It helps me to trade on smaller time frames.
I observe the following things from the chart.
Intermediate bottom is well established. The downswing above it created another higher bottom in the week of 18th May, which is yet to be confirmed.
NIFTY is now in the process of making an upswing and likely to break/touch intermediate top of 9989.
Volatility has dropped from 80 to 30s.
The stimulus package is behind us. COVID-19 is no longer a sudden shock. The world has started understanding more about the virus.
All developed country governments are pushing a lot of money to the system. For Indian markets, the view is likely to be uncertain for some time.
Now I’ll express my trading point of view.
I still believe we are in a bear market. That is significant price / time deterioration is likely to occur in the current wave of selling. I will reconsider my view when NIFTY sustains above 11200-11400 level.
One of the characteristics of bear market is it contains very strong rallies, which creates doubts in the mind of players having ‘bearish view’. I think NIFTY may just do that in the coming days. I don't know where NIFTY will head, but the trend is bullish on daily and weekly timeframes, and mostly the trades should be on the long side.
The current rally gets confirmed in the coming week by sustaining above 8978 and 9178.
In the current state, I won't be shorting NIFTY till I see some kind of range formation or breakdown.
If current upswing is very fast and very audacious in breaking resistance levels - like rising too quick and breaking barriers which everyone watches - 10000, 11000, it will further confirm my view of it being a bear market rally. If it is a slow grind with retracement, I have to reform my view.
What can change?
There are multiple types of information.
Information known to everyone.
Information known to very few.
Information unknown to everyone.
If there is some risk which is unknown to everyone, then the market structure alters dramatically. The first two kind of has not much impact on the structure
I'll review the structure again if and when this kind of information comes to me.
That's all! Wish a great trading weeks ahead!
