The status quo remains unchanged. Nifty again bounced back from the support level of 10600 aided by the Morning Star candlestick formation.
A three-day bullish reversal pattern consisting of three candlesticks – a long-bodied black candle extending the current downtrend, a short middle candle that gapped down on the open, and a long-bodied white candle that gapped up on the open and closed above the midpoint of the body of the first day.
- Nifty has broken down from the upward sloping blue trendline but bounced back above the line.
- The basic characteristic of the market is trendless as reflected by ADX(14). That is why it is oscillating between the support /resistance levels. Notice the Aug-Sep-Oct period when the line is consistently above 20 and the kind of trendiness Nifty was exhibiting.
- Bounce back from the 10600 support for the fourth time.
- FULL STO and RSI reversing from the oversold levels.
- I think it’s better to wait and watch this time rather than to again play the bounce back to 11000.
The Fear Factor:
- VIX has fallen close to 8% today, but the negative crossover should go for the market to rally further.
On the last weekend post, I have suggested that the market should be below 10700 on a closing basis for 3-4 days for a breakdown to happen. That possibility is negated with a close above 10700 today. The prudent thing is not to immediately get bullish but to watch the price action for the next few days.