In a twist of irony, the Nifty 50 has been walking along the 50-Day EMA, which of course, is flat. At this point, we will likely continue to see this market hang around this area, with the ₹18,000 level continuing to cause much attention.
- The market will likely be sideways for the short term as we try to figure out what to do with ourselves.
- The Nifty 50 will continue to perform better than many of the other longer-term charts.
- Still, at this point in time, I think we’ve got a situation where we are simply trying to figure out whether or not there’s enough “risk on attitude” out there to send this market higher.
The 200-Day EMA sits around the ₹17,600 level and should offer a bit of dynamic support. At this point, if we can break above the ₹18,400 level, then it’s likely that we could go looking to the ₹18,800 level, which I fully anticipate. We had recently formed a bit of a “double bottom”, so if it holds, I think that’s a good sign that we continue to go much higher. Furthermore, it does make quite a bit of sense that we would see the market look at that potential double bottom as support not only due to the fact that we have seen that happen, but also the fact that it was previous resistance, so a bit of “market memory” could come into the picture.
Anything below the 200-Day EMA would obviously be very negative, sending this market down to at least the 17,000 repeat level. I don’t necessarily anticipate seeing that, but I also recognize that there is a certain amount of fear out there, and it could come into the picture to make things a bit crazier in the markets. That being said, it’s very likely that volatility will remain an issue, so keep an eye on your position size but it does suggest that perhaps we have the ability to see violent swings on short-term charts. Longer-term, I still think that the Nifty 50 continues to outperform any of the other indices that I follow worldwide. Buying on the dips continues to work from what I can see, but you are going to have to be very patient with the markets.
