On October 11th, it seemed as if the Nifty will be bearish on October 12th i.e. today, there was a classic bearish engulfing pattern that had formed, and India VIX, which is normally inversely correlated to the Nifty was up by more than 5%. All this led me to believe that today would be a bear turn. But what happened destroyed me, the market saw a rally that was the largest in recent weeks. What happened? Why did the technicals fail, does anyone know something that I don’t? Experienced users please advice.
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Yesterday also buying was good at lower levels and which technical factor are you talking about? cause everyone was just careful but most were bullish as nifty crossed 50 day moving average also there was no negative news yesterday but market was just waiting for a positive news which it got today. its moving higher.
There was a bearish engulfing candlestick. The buying happened in the first half, and the market lost all its support in the second half and closed lower. Normally this is interpreted as a weakness. That was the technical indicator. Volatility had also increased indicating that the market was going to fall further.
Actually candle stick chart makes us to predict the , what kind of candle will form next, most of the time i observed you may not find particular chart patterns on candle stick chart but the Line chart will do nifty was not so bearish yesterday, Bank nifty was, today both leaders ( Nifty & Bank nifty / Reliance / HDFC Bank ) moved their respective index. It was the Reliance , so strong on Daily/weekly chart
adding to my view i am posting charts of Nifty & bank nifty , you can see that both the indices are in a trading range , one at resistance ( nifty) one at support ( bank nifty ) TA rule is that don"t buy at resistance , Don"t sell at support
Because you forgot basic Rule #1 of TA -
“Never predict, always follow”
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i dont think just increase volatility can be interpreted as short or long what i am talking is when it fell to lower levels i could not get in buy order at my desired price the buying there was rapid and there was no fundamental issue to bring nifty down.
this is very true, i have tried to predict on TA before but failed, fundamentals tel you what is going to happen and technical analysis will tel you when its gonna happen and when you should start following.
I beg to differ…
Although your first part is correct that Fundas do tell you what’s gonna happen…
But Techs don’t always tell when it’s gonna happen.
Basically the oft repeated wisdom that “Market discounts everything” ie prices reflect all things like funda, news etc is proven wrong since ages. Also the assumption that every participant in the market is rational being taking rational decisions is also wrong. For if not, how can market work? For at any given time if somebody is buying somebody must sell.
So market is actually a mad crowd and we are in between stampede…
Run in the direction of crowd or get crushed to death
By now you must be getting some ugly bad horrible images in mind…
But you need to see beauty in this to be successful.
This is how market works.
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Markets follow technical’s as well as news. But news will mostly trump all technicals according to my experience. If you look at the daily charts most of the huge bars made come with news. Also market will not respect any support and resistance levels when there’s some news involved.
In the end its all about probabilities in trading. Just go and check how many times bullish and bearish engulfing actually gives a winning trade its certainly not 100%.
Also, chart patterns work well at major supp-res area. Yesterday’s bearish engulfing was not at major resistance so the chance of follow through were less. Of course in hindsight everybody can analyse the charts like a professional but the fact is there is nothing 100% in the market otherwise we would all be billionaire’s.
Btw, today’s huge move was partly because of short covering as yesterdays short positions were covered.
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i think this TCS positive news can give bulls much power tomorrow.
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Also, IIP for August has come above market estimates and inflation is down so there could be bullishness tommorrow provided global markets are positive.
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considering how we could all discuss this i wanted a chat window for zerodha traders only so we can talk about ideas and perspective on market which all can benefit from. but @nithin said they did that before but some people started giving calls so it became more of a spam, if we can figure out a way to keep it as a closed zerodha only active traders group like how pi licences were given at the beginning and ban spams and people give or sell calls or training , i think its gonna go a long way in building a strong community, even for few active traders talking about macro data can help, so we as a zerodha nifty traders community will have the best info available at all times.
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It will also be immensely helpful for newbies like me. We can watch and learn about which data points to monitor. Mentorship is important and this is a great platform for it.
@utsav yes and also main thing is once we take position we always concentrate on news which helps us rather than hurt us, how you only saw a bearish engulfing pattern than see that nifty was above 50 day moving average , that there was no negative news yesterday and today morning it was positive. and one day’s engulfing pattern is not stronger than 50 day’s moving average as it is a 50 day’s moving average which is more than 2 months. that also does not mean it is a completely bullish sign but atleast you would know this is also there now if you take a trade you will think much more as you got new information, how you interpret is your wish, but u have access to un-altered info by people who are trading. so may be you may take less risk or not trade at all or some 1 may point out some other information or critical point which you would see as a bullish thing and you may take a long. more point is someone may be good at interpreting fundamentals better some technicals better some may know more about moving average and some more ant rsi and others so everyone points out everything so all know what are all the things playing.
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look at this we were bearish from few days these guys were bullish now its vice versa? (http://in.reuters.com/article/us-usa-stocks/wall-street-slips-as-bank-results-fail-to-excite-idINKBN1CH1M5)
or are global markets waiting for our markets to catch up?
@MaverickRabidDogIa “Btw, today’s huge move was partly because of short covering as yesterdays short positions were covered.”
is this because of open interest data or what is basis of this thought?
This was the reason👇
FII bought 1600 cr stocks in futures
FII bought 800 cr approx in index
FII Sold 100 cr in cash
DII bought 235 cr in cash
i believe this is due to usd erosion yesterday.
FII’s are back.
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First of all you guys should respect DEMO and thank MODI and Forget what US MARKETS do.
We are Unique in the world with 85% consumption and 15% export dependent.
Two Lakh crores came to MF in last six months alone this is more than what came whole of last year. Every month SIP getting 20000 crores.
Buy Dips no matter what Chart says. Don’t waste your time in Learning charts. They are made to pre programmed way.
BIG BOYS know what you will do at chart formations. That is what you did. Follow trend guys would have initiated short yesterday and caught on the wrong foot.
Reading more economic news and data will give edge. Don’t scan Chart formations on hundreds of stocks.
Use FnO data to find Direction and Strength. Read Nifty Option Chain Data.
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