Nifty on Support
After the panic selling in Nifty, many articles coming in to prove as Nifty is on support or major global incides on Support. Lets look at exactly what is this 61.8% support by illustrations and various other supports
Blue dotted lines are various Fibboncci retracement levels, for which most of the analysts considers calculating from Jun Low to August High. 61.8% is called as golden ratio and therefore its generally accepted that Nifty will bounce back from current levels and buying can resume. Also, previous resistance which Nifty broke with decent volumes has now become support for which few analysts can also term it as trendline support. We have also witnessed sharp recoveries near end of market hours in back to back last 2 trading sessions. After looking at FIIs figures, it looked like it was a short covering.
Interestingly, Nifty earlier closed at 23.6%, expecting a bounce back, but it opened with a gap down and sell off continued. Next to that day, Nifty opened at 38.2% Retracement levels and closed at 50% retracement levels giving a hope to traders with long position that now it will bounce back. Now, its a new ratio which is also a golden ratio creating hopes for the traders with a long positon.
Moving Average:
Nifty has been consistently taking support on Moving average lines of 20 MA and in the Month of June, it broke that support temporarily and after long, tested 50MA Support. But in recent sell off, Nifty broke that support too and even went below Lower band of Bollinger. This indicates that sell off is not yet over and may test 100MA soon. For time being as all global sentiments have turned positive, even SGX was green in last trading sessions, and most importantly, Nifty on Golden ratio of retracement levels of the latest Rally, it may be give a pullback, which should not be considered as bull back immediately. It is only after Nifty crosses and sustains above previous rally resistance of 9930, we must keep patience for any fresh longs. Till then, its a sell on rise market.
RSI at 36.30 facing southwards is also a worry for market.
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