"The Nifty fell by 80 points. Nifty falls below the crucial psychological 5000 level and closes just near it. Many sectors saw profit booking. "
Well, a perfect set up for the technical minded to look out for early reversal signs ... Check the following:
1. Evening star formation
2. A negative divergence on RSI and
3. A falling momentum
Surely the strength of the rally is giving early signals of fatigue. Yesterday I had mentioned tht the markets are quite 'nervous' and it seems todays movement confirmed the fear.
Moreover as indicated yesterday, profit booking stoploss has been triggered and now one should remain on the sidelines and condier short sell on close below 4960 or a break below 4930... !!
The additional signals indicated above should increase the confidence level of the short seller - once it breaks below 4960...
I presume one can now turn positive only if the markets breach the 5100 levels .. till that time - its 'correction' time!
Happy trading
CA Rajiv D Khatlawala
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