We were anticipating the current corrective rise since late last-week. The Japanese Stick Sandwich pattern formed on the day the Sensex fell 600 points, had already suggested a corrective upmove - mentioned on this blog. I have also indicated that now unless 3840 is broken, expect a corrective move.
The index opened in up gap, courtesy the $5 fall in Crude Oil, and remained positive during the day. Short covering is the obvious reason - no marks for guessing that!
The immediate question is what next. If you notice the range of the 'stick sandwich pattern' it is about 200 points in Nifty and hence we may well target a Nifty level of 4300. This, in fact, is also very near the retracement level of the recent down move.
In the chart you would observe that Nifty should complete it's current corrective move between 4300-4400 and at those levels, long positions must be exited.
(By the way, just remind yourself that you are right now not in a bull market, as earlier!!)
Happy trading
CA Rajiv D Khatlawala
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