NIFTY hit the high confluence zone after a relentless fall from 12100 to 10780 levels.
Sometimes basic techniques help us in identification of key cluster points and high probable low risk trade setups. The million dollar question is, how to identify contrarian trade setup and get an 400 point rally?
Let’s sneak into the Weekly and Daily charts to have a look on how its was possible to capture more than 3% move in NIFTY. The panic bottom was formed and when everybody was bearish we were able to take a low risk high probable trade setup.
The NIFTY formed an hammer candlestick pattern at the trendline confluence zone hinted an halt of downtrend as shown in daily chart above.
On weekly charts, NIFTY held on to the long term trendline support hinted a probable reversal for short term at least.
Thus, a low risk high probable trade setup could have been setup and rest is history what has happened.
NIFTY as anticipated rallied exactly 400 points after 1320 points of decline retracing 30% of the fall.
What’s next in for NIFTY? Where are we headed???
The question now is this a bear rally or bull trend base getting established???
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