Last
week, nifty moved making a long range of 21800 on the down side and 23300 on
the upper side. Due to highly volatile movement on the back of election results
announcement, it made a huge long tail candle. Firstly, nifty on 3rd June,2024
went up 3.35% on the expectation of NDA Government getting majority mandates as
per exit polls all over the country and it closed at 23263.90.Next day on 4th
June,2024 (the election results announcement day),nifty faced a huge selling pressure
as the NDA Government could not garner majority seats in Loksabha election and
nifty closed at 21884.5 reaching a low of 21275 level.
On 5th June,
2024,nifty shot up by 3.36% and gave a closing of 22620.35 on the hope of NDA
alliance making the Government selecting Narendra Modi as the next Prime
Minister of India. On 6th June, 2024 nifty went up by 0.89% and closed at
22821. On 7th June, 2024 it went up by 2.05% and
closed at 23290.15.
So, what was the net effect? Nifty went up by more than 5.5% during the week (from 3rd June to 7th June).And recovered 28 lakh crore of investors' lost money of 31 lakh crore which they lost on 4th June, 2024.If we notice very closely the movement of nifty on 4th June, we can see that it faced the biggest selling of 5.93% and touched a low of 21275 level. But at the end it gave a closing above 21800 level which is the last line of defence as of now.
Earlier nifty tried
three more times to break the level of 21800 but could not able to break the
strong support Line As a result, nifty last week made a huge long tail candle
or we can say it a big shooting star candle.
What does this candle signify?
It means that the
nifty faced huge selling pressure from upper level of 23330 sellers pulled down
the price upto 21275 level. But then buyers took the control of the market, and
pushed the price higher. So, it made a huge long tail candle which is a bullish
candle as the strength of buyers are higher than the strength of the sellers.
Now, nifty has its
immediate resistance at 23350 level which if taken out we can see the next move
of nifty upto 23500 level of uncharted territory.
Nifty has its
immediate support at 23000 level, and then at 22800.Our main focus from now
will be on the level of 21800,the strongest support of nifty, which if
broken decisively with other indicators supporting the break down, then only we
will look for correction. We will correlate the fall with RSI making lower low
breaking 40 line, or nifty giving closing below 20 EMA on weekly chart, and the
volume supporting the fall.
If we currently see
RSI in daily time frame is 59.24 or nearly at 60 line. On weekly TF the RSI is
66.85 and in monthly TF the RSI is 76.90(may be above 85-90, it will be in overbought
zone) . All the three time frames' RSI are in perfect high momentum. One thing
we noticed that, from November, 2023 the RSI on weekly chart has shifted it's
range above 60 line and it still maintaining the same level intact which was a
good sign for nifty that has kept its upward journey intact till now.
No one can predict when will correction in the market happen. We should ignore one day's gains or losses, rather we should keep our focus on long term wealth creation. If you want to make quick bucks within a short time, sooner or later you will lose your capital, if you are not a trained or seasoned trader. We should rather keep our focus on learning from the market and we can look for stock specific action to build a long-term portfolio. If we look for long term perspective, we can compound our investment in the stock market. Keep learning, keep investing.
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.
