Extended holiday week made shorts get covered to stay away from undue risk. Otherwise market has not taken clear support or any clear pattern formation before turning up of Thursday. Range of the market has gone very much tight and volume has again gone down by 10% to previous session in the up-close today, signifying total absence of backup strength from the Bulls.
Present market needs more caution on the long trades. The way chart patterns are panning out, looks like NIFTY will reach bearish divergence on Daily charts next week and Weekly charts will give way for trend reversal.
In case of break out on the upside too, it is more likely to be a sucker of late comers. MACD histogram on the Weekly has taken its head above water with a small value above zero. All these patterns are adding strength to Weekly bearishness.
Monthly chart is retracing a very clear bearish divergence on MACD Histogram with EMA support at 4765 levels. This is the low of February; a re-test to these levels will bring bullish divergence on week MACD Histogram and only they will NIFTY get the robust strength to move again.
Market is going to take the sleeping bulls by surprise or wake them up from slumber and while they make merry with a new high on the Index, it will take a sharp 'U' turn to catch them unaware.
5370-390 is now very crucial, be on the front foot to take immediate action and cash in on the short side. Our most expected high probability winning long trade has not come. Let's wait for the next move. Patience pays, we will get rewarded in a handsome way for it.
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