Nifty Futures on the September Expiry Date Crashed -1.9% on a strong sentimental note and it is a strong rejection out of the previous consolidation zone 8700-9000. The drop was imminent post the break of 8700 zone on the announcement of Indian army launched surgical strike on Pakistani soil.
Nifty Futures opened gap down and made a island reversal pattern on Monday. Though it is a classical bearish pattern,markets generally reacts against the classical technique most of the time. Trading Sentiment is negative and after the Monday’s impact on markets expectation on the psychological figure 9000 reduced.
In the last week we had seen aggressive short covering from shorter timeframe sellers followed by lack of momentum post the breakout of 8800 zone. In the last three days again we started making fresh three day consolidation in the range 8800-8860 zone indicating that trend is getting tired and whomever trading this zone is most likely dominated by shorter timeframe buyers
One of the toughest part in trading is you see a trend breakout and not try to trade against it. However most of traders love to short a strong trend for smaller gains and the short sellers keep on piling up every up every upmove. When you are seeing a breakout on your charts one of the questions you have to ask yourself is “is this breakout really strong on weak breakout” and that understanding make you to ride the trend. Else we will be the weaker prey and ends providing liquidity to the strong players!
Nifty Futures currently trading in a broader consolidation range for the entire august month and the September series contract is still trading in the broader range between 8575-8800. Overall Market mood is not so far benefiting the trend followers. Choppiness is again expected on Monday. However price trading and maintaining above 8600 indicates a possible continuation of the range 8575-8800.
Current Uptrend is almost 7 months old and you can see from the chart though market had done almost 1800+ points since Feb 2016 majority of the times markets are in consolidation phase as indicates. Too much consolidation indicates that trend is aging. Aging doesn’t mean that we are going to see a reversal. One need to understand that what phase of market we are in to take relevant trading decisions.
Nifty Daily Sentimental indications are positive before the FED meet and Bank Nifty continue to be negative and at highly oversold levels. However what worrying is the weekly sentiment in Nifty and Bank Nifty turned negative last week and so far this week continues to be negative. Only Nifty weekly price distributions above 7800 sounds positive in the long run and retail traders are confident of writing 7600CE for the current option series.
Nifty and Bank Nifty weekly sentiment maintains positive despite weakness in the market. Last week DII continued their relentless buying mode despite weakness in the market and with the continue FII selling pressure. US Market (S&P500) closed with marginal weekly gains with a surprising fierce up move on the friday trading session. India VIX continued its downtrend despite weakness in the market which indicates lack of fear in the market at this point.
Nifty Daily continues to be in positive sentiment for the last 5 trading sessions. However the weekly sentiment holds negative for the last three weeks and likely to continue for yet another week. On contrary Banknifty sentiment turns positive on Daily and weekly charts after the friday’s price action. Bank Nifty is expected to outperform Nifty in the upcoming trading sessions.
Last friday China Cuts the Interest rate for the sixth time in this year. Global Markets cheered on last friday. We could expect one more sentimental Gap Up on Monday in Nifty and Bank Nifty futures this attempt could try to close the professional gap created in Nifty Futures at 8358 and BankNifty Futures at 18240. SGX Nifty is already indicating a positive momentum. Both the daily Sentiment and Weekly Sentiment tends to remain positive.