Last Friday, India Vix ended at 24.60 and after the exit polls on 1st June,2024 about the probable outcome of the Loksabha Election result, Monday can witness high volatility in the market, India Vix likely to cross 25 level. But we missed the so called volatility in the market till now.
Technical View Of Nifty50 For The Next Week:
Before the big event, what we experienced that Nifty 50 formed a Dark Cloud Cover Candlestick pattern on weekly chart. The range of the Dark Cloud Cover Candle is 23100 to 22400.When a Dark Cloud Cover Candle is formed at the top of the existing uptrend it signals potential pause in the further continuation of the uptrend. Or it may turn to be possible trend reversal towards downside.
When the low of the Dark Cloud Cover Candle will be broken, we can witness a heavy downfall in nifty. Here, the low of the candle is at 22400 level which is Nifty's immediate support as per daily chart where it formed a long legged doji candle.
What is the logic behind the Dark Cloud Cover Candlestick Pattern?
On the first week, while bullish trend continues, a big bullish candle was formed (as the first candle), on the second week, market opened gap up reconfirming the bulls' control over the market. But at the end of the week, sudden selling pressure emerged due to profit booking or uncertainty about the probable outcome of the elections results, as market was at the peak, driving the price down which formed a Dark Cloud Cover Candle. The bearish candle closed below the midpoint of the prior bullish candle ((engulfed more than 50% of the previous candle). First, the Bulls tried to push the price higher, so the gap up, then bears took the control of the market and pulled down the price lower. It indicates a probable trend reversal. We have made detail analysis of this pattern in our previous article of "A Logical Guide to Candlestick Pattern"- Part 3. Please go and check our website for great learning.
Nifty has its immediate resistance at 22650 level which if broken with high volume, it can give a move upto 22800 to 22900 and so on. The biggest resistance is at 23100 level which if broken on the back of election results, we can see a huge movement in Nifty in the coming days.
The bigger range now on the Nifty50 is from 23100 to 21800.Breaking either side we can see 300 to 500 points move in that direction in which direction it will break. Nevertheless, you should be very careful during this week ahead. Here are some things to save yourselves from big trouble of the possible volatility that might happen.
First of all, book part of your holdings that are in good profit. You can make new position again after event week or after 10th June,2024.
Secondly, If you trade in futures and options, reduce the lot size to be protected from big losses.
Thirdly, don't overtrade during this week I e. from the 3rd June to 7th June,2024. Historically it has been noticed that stock market is known to be highly volatile during this type of events and after the results.
Fourthly, always put a stop loss in the system, if you cannot avoid the lure of trading in the market. It is very important.
Finally, it is better to sit on the sideline and to enjoy the volatility for learning something new from the market. Do not run for the greed to earn huge profits, because it can backfire anytime in this period. Be cautious and enjoy the volatility. Keep learning, keep reading our contents if you have learnt something.
Disclaimer: The information provided on MoneyWiseMind is for educational and informational purposes only. It is not intended to be financial advice, and you should not rely on it as such. Before making any financial decisions, you should consult a licensed financial advisor.
