RBI policy kept rates unchanged, market was a little jittery with expectations that, there can be negative surprise. As nothing changed, interest rates kept at 5.15. It was joy for the markets which moved up for the 4th straight day after the budget day fall.
After a steep drop, getting to big rally is creating confusion in the minds of traders.
Nifty Daily chart
When there is a big drop and steep recovery, it brings confusion. Histogram on the chart has a deep bottom & now price has moved above the EMA. Price says market is bullish, indicator says there is strength on the bear side. And the chart is trending bearish (red lines on the top – indicate bearish trend)
This confusion should lead the markets to go nowhere. For few days it will hover around the range, find resistance at 12292 levels reached on 24th Jan. From here, going long will be a trade that has very less steam left in it. For a short we need price to close below the EMA, which again will be a trade that is half way through.
So, no trades for few days in Nifty. Even Bank Nifty is the same. If both indices are in confused state, in a market that is having strong bullish strength, where can a trade come through.
In a market that has made a good rally, best trades can come from the shorts. One can find stocks that are showing weakness at the top and short them.
Reliance, Hindalco & VEDL have potential shorts –
All three charts having similar pattern. Price is in the zone between 2 EMA’s. Histogram has good depth & chart is trending bearish. Also all 3 have reached value zone( area between both EMA) in 3 to 4 days from their bottom.
Within 5 day’s from the peak or bottom is considered to be hot and more likely to reach back to the bottom.
These are for intra day trades.
Coming to trades for the next day, that is Friday 07-02-2020.
Balakrishna Ind – Stock is getting weak at the top, can have a short trade once the daily histogram ticks down. There was a false break out yesterday, which also adds to bearish strength.
Havells, is getting closer to its weekly value zone. A tick down on the daily will give a short signal. Target can be at 576.
Mindtree had a high rejected & ready for short below 898.