Are we there yet...

When a single month movement erases out irrationally swollen rally of past 3 years, there is no use of looking at short term supports or charts. While the answer to the question, “when will the mayhem stop?” lies more with scientific community and governments with their ability to stop the spread of virus and little with standard measures by central banks, still need to see charts to see the next support levels.

Looking at Nifty monthly charts again, seeing the index at a crucial support level. If it closes above the first red line for a couple weeks, ( this will be dependent how well we are able to stop the spread domestically as well as dependent on how large economies behave), we will have dodged the bullet and there is still chance for all those “bought on dips for I won’t miss the 2008 bus again” kind of positions. Though for sustaining higher need monthly or at least two consecutive weeks close above 9600 (top of the cloud) and not just above red line demand/supply zone support.

But if we do manage to close below the support and even below 8600 (cloud bottom) and next candle opening below cloud, then we may be in serious trouble as this is the first opening of monthly candle below the cloud for last 20+ years. Next major support only comes around 6100-6200 which is the confluence of 2007-08 and 2010 highs and 200 MA. I feel as we going week 3 and 4 of virus scare in India, the chances of Nifty closing below 9000 are looking increasingly likely than above it. So the question of should I add on dips is still wait for it and watch it. For if a certain stock has fallen by 50% from highs, you are still better off if you wait and buy on rallies with may be 100rs stop loss than try to catch the perfect bottom. Cause as explained to one of my first teacher in trading “Bottom fishing leaves smelly fingers”.. be safe..

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