As I summarized “a bearish bias with 11100 stop loss has better risk/reward potential” last week, the markets have fallen for the first three days of this week. The last two and half months support level of 10600 is the first port of call. Also, wait for the FULL STO to go below 20 before expecting any consolidation.
One aspect of the market that I have repeatedly drawn attention to here, here & here is the very poor breadth. Very few stocks are actually helping the Nifty to stay where it is and the stocks in the broader market are having a breakdown. Just look at the AD line below to get a sense of the kind of situation we are currently in.
The VIX should give a negative crossover soon which will accelerate the fall.
High probability of a Right Shoulder is in place unless we takeout 11000 and a breakdown below 10600 can lead to a revisit of 10000 in the next few months.
Maintain Bearish bias, wait for 10600.