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Uncertainty ahead of a big event has given a nightmare to weak bulls and ultimately resulted in profit-booking in Nifty50. The fall of more than 220 points has been witnessed in the last four trading sessions. Traders have adopted a cautious approach and minimised their open positions to large extent, as weak rollover data indicated that traders have liquidated their positions ahead of the most-awaited event.
In coming days, when the Budget is knocking on the door, high volatility is expected but upside seems to be limited.
Overall structure suggests that we could head towards the recent lows of 11,929. The Bullish Harami pattern formed last week provided some hope to the bulls but a reversal from the resistance level suggests that the bears will continue to have an upper hand in short term. Rising trend line breakdown suggests that mild weakness is creeping in and a negative bias needs to be adopted.
Short-term moving averages are trading with negative curve and the RSI is trading in sideways zone, suggesting that a sell-on-rise approach should be adopted for the next few trading sessions.
Taking the Fibonacci Theory into consideration, the Nifty 50 has broken the 38.2 percent projection level of previous week range and retraced. The retracement has strengthened the bears and the fall of trading session on January 30 is falling under the category of reversal after retracement. The next projected target is 100 percent projection level, which is approximately 11,929.
The immediate resistance level for the short term is 12,190 and any rise in price should be taken as shorting opportunity until the resistance get traded on the higher side.
NIFTY 50 DAILY
The budget is expected to do wonder to revive the spirit of investors but most of the factors seem to be discounted. Though it will provide fresh direction to the market, the volatility can not be ruled out in immediate short term. A lower level of 11,929 or even 11,841 could be seen on the Budget day itself. The selling setup will be negated and resumption of uptrend is expected only if 12,295 trades on the higher side on closing basis.Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.