Nifty: Do I Rely Upon Indicators?

28 thg 10, 2018

For me, an indicator is a tool that provides me a message how the market 'may' behave in future. Which not at all means that the market 'will' behave as has been indicated. Almost all successful traders will agree with me if I say that there are no 'Red' and 'Green' signals in the market.
For example in the current market scenario, the index has been drifting down in an oversold environment. Oversold here means that most of the popular indicators like RSI, Stochastic etc. have been signalling that the market is deeply oversold and there 'should be' a bounce-back/pullback.
Also trust me when I say that the market may wriggle its way down to nearing supports when the indicators are not just signalling 'oversold' conditions but also showing 'divergence'. You can see the Price-RSI behavior mismatch as the market has been making new lows but the RSI is making higher lows. The markets can do this multiple times for weeks and even for months in some cases.

So the indicators are telling me only that bears are getting weaker. But there is no sign of strength on the upside as of now.

So what to expect in the coming days?

Well !! the picture would be more clear after Monday opening. As of now I can say that it should take some support from 9950-10050 zone as its an important structure support. I can't say as of now if it would be the end of bear phase or not. But in case of pullback it should try to atleast retest the trendline which was broken decisively last week.

As per my previous analysis on the index, my instincts have been indicating further weakness after brief pullbacks in the coming days.

Below 9950 we have no important support before 9700, and that's 250 points which is a substantial cut and should be kept under notice.

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Hope this analysis would help some traders in making better decisions.
Regards