Market losing direction

Corona virus was causing the markets directionless was the thoughts that were spreading in the media. While it seems to be not so, when there is a steep fall and a strong recovery, it confuses traders.

When the market goes deep down, traders are prepared for shorting the market when it comes up a little. This is called a rally in bear market and gives a good shorting opportunity. When the rally happens & at the place where a trade in the direction of main trend gets whipsawed (Whipsaw is a trade that goes opposite to its intended direction). First the losing trade in a strong trend brings confusion to the traders. Then, when the market goes in the opposite side of the prevailing trend to reverse it, it adds to even more confusion.

This is what has happened in our markets now. After budget day fall, we had straight recovery for the next 5 days. As the recovery reached its top, steam of the uptrend was getting exhausted. It began losing momentum or strength to move up further. By then all the traders who were prepared for shorting the markets lost hope. Now, confused they are staying away, which has caused the market to stay directionless.

Nifty on the daily chart has gone non-trending. Bank Nifty is kind of holding on at the moment, one are 2 more days of tightness, even bank nifty will go directionless.

When the major indices are off trading, there will be only few stocks that will push the markets into a new direction. In that manner we had Reliance, Hindalco & Vedanta leading the bear pressure. Reliance short trade which had a target at 1392, fell short of its target by a larger margin and has reversed. Even with such a move Reliance has given a 25 points winning trade, which closed today.

Corona virus was causing the markets directionless was the thoughts that were spreading in the media. While it seems to be not so, when there is a steep fall and a strong recovery, it confuses traders.

When the market goes deep down, traders are prepared for shorting the market when it comes up a little. This is called a rally in bear market and gives a good shorting opportunity. When the rally happens & at the place where a trade in the direction of main trend gets whipsawed (Whipsaw is a trade that goes opposite to its intended direction). First the losing trade in a strong trend brings confusion to the traders. Then, when the market goes in the opposite side of the prevailing trend to reverse it, it adds to even more confusion.

This is what has happened in our markets now. After budget day fall, we had straight recovery for the next 5 days. As the recovery reached its top, steam of the uptrend was getting exhausted. It began losing momentum or strength to move up further. By then all the traders who were prepared for shorting the markets lost hope. Now, confused they are staying away, which has caused the market to stay directionless.

Nifty on the daily chart has gone non-trending. Bank Nifty is kind of holding on at the moment, one are 2 more days of tightness, even bank nifty will go directionless.

When the major indices are off trading, there will be only few stocks that will push the markets into a new direction. In that manner we had Reliance, Hindalco & Vedanta leading the bear pressure. Reliance short trade which had a target at 1392, fell short of its target by a larger margin and has reversed. Even with such a move Reliance has given a 25 points winning trade, which closed today.

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Ramesh Sigamani

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