See resistance at 3,300-3,200 levels: Sudarshan Sukhani

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Sudarshan Sukhani of Technical Trends said the markets are in an intermediate trend at present. Although there has been a 45% rally from the earlier lows that the markets saw six days back, it still continues to be a bear market, he added.

Sukhani feels that the markets are getting overbought and that they will soon begin to consolidate and fall. He feels there is resistance at 3,300-3,200 levels. He said that even if the Nifty opens on 3,300, it will still be a bear market. Thus, he feels that traders need to be careful of long positions and taking profits.

Here is a verbatim transcript of the exclusive interview with Sudarshan Sukhani on CNBC-TV18. Also watch the accompanying video.

Q: Do you think the Nifty targets need to be revised upward or you would start getting careful?

 

A: This is an intermediate uptrend. So, in an uptrend one buys on dips. Now the key question here is that we have seen a 45% rally from the lows that were made just six days ago. So, is the market getting overbought? The answer is yes, we are close to resistance. Probably, worldwide we are close to the area where the markets will begin to consolidate and even start falling.

 

Therefore, traders have to say there maybe some more momentum left in the rally, nobody can say how much. But one starts taking profits. So we have the first range around 3,200-3,300, which will give resistance then at 3,500 and then at 3,800, there is resistance all along. Thus, I would start being careful.

 

Just as we went on the excessive irrational pessimism on the downside, we are now hearing the same voices saying things are up, but no, they are not. This is a bear market. The Nifty, even if it opens higher, will be at 3,300 that is not a bull market.

 

Therefore, traders have to be very careful now of long positions and also of taking profits.

 

Q: If you were a positional trader, would you take profits at 3,230-3,250 or would you just keep riding with a stop loss?

 

A: One has to ride this with a stop loss. Although, now that the risk reward ratio has become completely unfavourable to the bulls we have seen that 1,000 point rally maybe 100 points more, maybe 200 points more; however, the giving away of the gains could be larger.

 

So, this is a call that the trader has to make. I would say since I can use technicals, I can tighten my stops and just stay put with it. That is what I intend to do.

 

Q: Where would you keep that stop loss though as a long trader?

 

A: The stoploss would be 3,100 for the Nifty. If we close this gap, which we are seeing today then all bets are away. In any case the market need not fall.

 

The key point here is why should one not protect his profits? So, I am not saying that the Nifty will fall to 2,700. I doubt it at least currently. But one must protect his profits. The Nifty could simply go into a range and move up and down for the next month.

 

Q: Looking at technicals, what kind of a trading range do you expect this market to be in from now, after the recent pullback?

 A: The market has not defined any levels as yet. So, we still have to wait for those definitions but I am assuming that, this is a very broad idea, we could see a range somewhere between 2,500 and 3,500. Those levels have support and resistance at earlier periods. So we could have a 1,000 point range for maybe a year.

 

Disclaimer:

 

I have delta neutral positions in Nifty and investments in shares.