A trend in motion will remain in motion …
Nifty continued its decline after hitting a high of 10400 at the open. It closed at the low point of the day. If you are tempted to bottom fish in the current market remember as on today the market is Bearishly poised in almost all time frames. The bottom building process will start with the smallest timeframe and then move on to the daily and weekly charts. We will have bullish EMA trend positions in Hourly then Daily and then finally weekly. Currently, there is none in any timeframe.
For the last 10 days as shown in the Hourly chart above, Nifty was within a flag formation which looks like breaking to the downside at today’s close. A flag is a small rectangle pattern that slopes against the previous trend. If the previous move was up, then the flag would slope down. If the move was down, then the flag would slope up – as in this case. The 20, 50 & 200 EMAs are all pointing down and the PPO momentum is bearish and also below zero. INDIA VIX is at a new high implying an elevated level of risk off. In a nutshell, avoid buying anything now.
On the Daily charts, both the short-term (STT) and the intermediate term (ITT) trend is down. Additionally, PPO is below the centre line with a negative crossover implying a negative momentum. As the long-term trend (LTT) is still up, the first sign of any bullishness should come with a positive PPO crossover. Till that time, its better to be on the sidelines.