18 October 2019 (8:44 am IST)
Yesterday, Indian stock markets broke out of their two-day range and rallied to major indexes closed above their previous resistance levels, which can now act as a support.
Today, SGX Nifty is trading around 30 points lower, which is normal after yesterday’s steep climb. Many small traders are looking to short Nifty and Bank Nifty, but they must be careful because on daily, weekly and 5-hour charts (bigger timeframes) the trend has become up. After yesterday’s rally, even the monthly candlestick has turned positive for Nifty.
Just have a look at the daily candlestick charts of Nifty, and you can see that since the day this index had a huge rally on corporate tax cuts, it has developed new support at 11,100 and since then it has made a “higher low” pattern on both the daily and weekly charts. We all know that a “higher low” pattern indicates an uptrend.
After yesterday’s rally and today’s possible low opening, Nifty and broader Indian stock markets will have two trend possibilities-
(1) After a low opening, major indexes will bounce back from 2- Day Moving Average on hourly charts (current support), in which condition the previous uptrend will continue, or
(2) Major indexes will continue to fall below this 20-DMA on hourly charts and a new, minor downtrend will start.
For day trading, traders must wait and watch to see what kind of intraday trend unfolds and only after that, they should start trading.
Apart from these, check pivot levels provided on our Pivot Trading page for intraday support and resistance levels. These levels are:
Indian stock markets are expected to open with negative numbers. This is normal after a straight rally in the previous session. From here, the minor uptrend can continue if support levels remain strong. If support levels are broken, then a minor downtrend can start within the weekly range.