Hi!
I am giving below the monthly chart for spot Nifty from July 2012 till date. The low was 4720 on 26th Aug 2012, and from there, it had risen to the high of around 9119 on 4th Mar 2015.
On 12th Feb 2016, the spot Nifty had fallen to a low of 6869, whereas the 50% level (in yellow dotted line) is around 6823. What does it mean?
Will the Nifty touch 6823 in the near future or even go marginally below it and then will recover? A Billion Dollar question, especially with the negative sentiments being observed in the world stock markets.
Theoretically, it is also said that a fall of 61.8 % is considered healthy, which probably means that the fall may continue to touch / cross the 61.8 % level , which is around 6280.
But are these two levels of 6820 and 6280 on the Monthly chart for spot Nifty, would have any importance at all?
To understand it, let us see the daily chart for spot Nifty :
We start from the low of around 7724 on 17th Oct 2014, to the high of around 9119 on 4th Mar 2015. You will see that the entire gain has been wiped off and spot Nifty has further fallen to the low of around 6860 on 11th Feb 2016, which is a level at 161.80 % of the above fall.
Theoretically, there should be change in the direction and spot Nifty must start gaining it’s value, which in fact it did marginally on Fri 12th Feb 2016.
So…. What it is going to be like, for the week starting from Mon 15th Feb 2016? Up or Down?
In my opinion, we are at a Cross Roads. The spot Nifty, theoretically, should now gain strength and should move upwards, irrespective of the negativities in the world market.
But what if these negativities in the world market over power the Nifty to make it fall more? Possible, but not essential. Moreover, the whole of market is expecting the Nifty to have a pre-budget rally. Will it be in the next week?
I don’t know. Just think and take proper decisions.
These are my opinions based on my own analysis of the market, and I could be wrong.
Cheers!
SS