Nifty & BankNifty Analysis — 12 Apr 2024–4 RED Candles, first real sign of reversal?-PostMortem
Nifty Analysis — Stance Neutral ➡️️
The first real sign of a breakdown. US CPI came in hot due to which the markets reacted pretty badly on Wednesday. Thursday the markets gained back some points, but I strongly think the fall in our markets had more to do with the “Iran — Israel” tensions than inflation.
The reason I am saying that is because after the gap-down open, we made a swing low but then recovered nicely from 09.43 to 12.07. From 12.07 to close we lost 192 points ~ 0.85%. We changed the stance from Bullish to Neutral as soon as 22689 levels were breached. Ideally, we should have changed the status to bearish as the afternoon momentum was quite good. The only reason we did not do that was to check if the reaction was a little too much, if we continue to maintain the same momentum on Monday — we will look out for bearish opportunities.
On the higher time frame, we have a double top formation (M pattern). To negate the pattern we would have to take out the ATH, otherwise, it looks like a nice setup to go bearish. 22519 is a good interim support level, the main support comes only at 22295.
I started Algo trading on Nifty50 today, and ended the day with a gain of Rs9465. Exited prematurely at 09.44 as soon as the markets started to crack.
BankNifty Analysis — Stance Neutral ➡️️
BankNifty did not fall as much as Nifty50 today, we opened -244pts as gap-down, and the first candle itself was a strong green candle which gave the impression that the Bears may lose control.
The follow-up action was good enough and we retested the swing low by 09.47 giving some hope, but again the markets started recovering till 12.11. I was posting in our trader’s chat group that if we stay like this the short covering will come in and we may end up going up and that is exactly when the 2nd round of selling came in. In the second leg, we lost another 311 points ~ 0.64%.
On the 63mts TF, BankNifty ended up creating the higher high. To know if the bullish trend is at threat or not — we should take out the support of 47465 soon, but that is around 1000pts away. We would like to start Monday with a neutral stance and then take it up from there.
BankNifty Algo trades ended with a gain of Rs7735. Prematurely exited at 09.44 sensing the markets were beginning to crack.
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