Moneycontrol Be a Pro
Get App
Last Updated : Aug 18, 2019 08:02 AM IST | Source: Moneycontrol.com

Don't get carried away by any rise, fall is on cards

All European markets are on the verge of breaking major support levels and traders need major level caution on long side

Moneycontrol Contributor @moneycontrolcom

Manali Bhatia

The Indian market and its global peers are going through a rough phase for the last few weeks on the back of a sombre economic environment and negative news flows.

Core Euro Zone yields fell to all-time low after US President Donald Trump announced more tariffs amounting to $300 billion after discussions with China.

Close

Global markets are reacting negatively to the negative bond yield curve. Sensing the risk of weak global clues and US-China trade war escalation would shift investors toward fixed income assets, which deteriorates the sentiments further.

Indian markets are unlikely to decouple with global tensions for a very long time, and this ongoing correction could result in more pain for the coming days. All European markets are on the verge of breaking major support levels, and traders need major level caution on the long side.

FTSE 100

1

FTSE 100 daily

The UK market was trading with the cycle of higher highs and higher lows, which is the most basic indication of the strength of any index. The buying is showing signs of abating and the cycle has been reversed. As a result, it trades with lower tops and lower bottoms.

There is a negative crossover of major short term moving averages over a long term averages. The 200-day daily moving average (DMA) has been breached on the lower side and more weakness is expected.

DAX (Germany)

Germany market is trading below its important support level, as well as its 200 DMA. Though we could see mild short term pullback on the back short term positive divergence on the RSI, but it is likely to be the only selling opportunity for traders.

CAC 40, France

Currently, it looking strongest among all European markets, but it is trading with a negative bias, and a big decline could come in once 5,150 trades on the lower side

Dow Jones Industrial, United States

Dow Jones Daily

The US markets are trading with a negative crossover of major short term and long term moving averages. The rising trend line has been breached on the lower side, and momentum indicators are trading in the bearish zone. Any rise in prices is likely to sell into, and traders can expect lower levels in coming days.

Nifty 50

Nifty50 Daily

After a deep correction, the Nifty is forming a bear flag. The 200 DMA is on the downside, prices have once again formed a bearish candlestick pattern at the resistance level. The Nifty has been respecting the rising trend line for the last two years, but every time the velocity of bounce is decreasing.

Traders could see a steep fall once the trend line support get broken. 10,850 will act as major level for coming days, and any close below this could drag the Nifty down till 10,500 and even 10,300.

Connecting the fundamental triggers mentioned above, we could project that these support levels are likely to break on the downside, and traders should not carried away by any rise until we close above 11,250 on weekly basis as it could be a bull trap.

(The Author is Senior Research Analyst at Rudra Shares & Stock Brokers.)

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .
First Published on Aug 18, 2019 08:02 am
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant