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July, 15

Nifty 50: What to do for 10 Aug Expiry?

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The Indian markets have started to correct after a one-way rally. The signs of increasing selling pressure started cropping up in the previous week when the index delivered its first red weekly closing, after 4 green ones. This week continued the losing streak as fell 0.66% to 19,517, primarily on account of a downgrade of the US debt status by Fitch Ratings.

Some of you might wonder, this should be the problem of the US, not India. Well, we live in a globalized world with connected economies. So the impact of one cascades down to other countries, especially when the problem is with the largest economy in the world. There’s a famous saying to sum it up “When the US sneezes, the world catches a cold”

Image Description: Daily chart of Nifty 50 (spot)

Image Source: Investing.com

So, what is the current trend in the index? Well, I believe that the bull run is still intact. In technical parlance, an end of a bull run can be defined as when the index corrects more than 20% from its peak. As of today, the all-time high is 19,991.85, meaning we need a correction of 3,998 points to technically call it an end of the bull run.

While the broader trend is still positive, the short-term trend is surely negative. Looking at the trend structure, it does not seem like a buy-on-dip market to me, from the trading perspective. The index has started to form a lower low and lower high formation which is the very definition of a downtrend.

As per the fractal analysis, the nearest resistance is present at 19,795, which has come down from the previous up fractal of 19,867. So as long as this immediate resistance is not breached, short positions might prove to be more profitable than long ones.

For the current 10 August 2023 weekly expiry, the index has a resistance at 19,800, (rounding off 19,795) and support at 19,300, which is around the low of this week. This 500-point-wide range is expected to curb the index movement in the next week.

Disclosure: I have multiple positions in Nifty 50.

Read More: Explained: Why Did the Market Crack 1% Today?



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