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NIFTY – EARLY SIGN OF TOPPING OUT PATTERN SEEN

 

 

 

 

 

 

 

 

NIFTY – EARLY SIGN OF TOPPING OUT PATTERN SEEN – 1-2 YEARS VIEW

 

  • NIFTY GAIN FROM 6200 ( IN Feb 2014) to 11750 (Aug2018) a gain close to 90% in 4 years in absolute terms.

 

  • We have seen the negative diversion in monthly chart in Aug 2018. Negative diversion means – Price makes new high but RSI (relative strength index – Technical terms to define the strength of the market), makes new low..

 

  • This indicates that though the market is making a new high but the strength of the rally is getting weak.

 

  • The following picture will explain the same.

OBSERVATION – In Feb 2018, nifty made high of 11171 & RSI was 75.5 & after that nifty was 11605, where RSI  is 70. It shows that though nifty made new high but Strength is getting weak. Last time,it was seen in 2015.  Nov2014 Nifty was 8588 when RSI was 80.5 & after that, nifty made high of 8901 ,  but RSI was 77.80. Means strength of rally is getting weak. After that high, nifty made a low of 6825 ( feb 2016)  , or nifty lost 25% from its top

 

  • Would advise an investor to be cautious on the overall direction of the market for next 1to 1.5 years. Last time it happened, the market was making the new low for next 1 year.

 

  • To me , One can take caution approach in his portfolio & should be around 30% in cash/liquid.

 

The above is slightly medium-term view for Portfolio Investor. Long term view of the market remains strong only

 

 

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One Comment to NIFTY – EARLY SIGN OF TOPPING OUT PATTERN SEEN

  1. […] On September 2018, we had come out with a report that, early sign of topping out pattern seen in Nifty when nifty was around 11300. One can read the report at – http://www.einfomet.com/nifty-early-sign-of-topping-out-pattern-seen/ […]

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