Will the Market Rally Continue?

Apr 29, 2020

Apurva Sheth, Editor,Profit Hunter Pro

The market has rallied sharply from the recent lows. The sentiment is slowly turning bullish again.

Is this justified or is it just hope?

In today's video I want to share some important market indicators which can answer this question.

I hope you will find this knowledge useful. Let me know your thoughts in the comments...

Hello, everyone. I am Apurva Sheth and I welcome you to this latest edition of Fast Profits Daily.

Markets have bounced back sharply since the bottom and had any March, the index is up by almost 20% from its lows. The index is up in the month of April by about 8%. However, most of these gains have come in the first 2 weeks of April. Over the last couple of days, the up move has slowed down sharply. The index has in fact not been able to cross the me levels of 9,400 decisively.

So what would be the reason behind this? Why is it that the index is facing so much of resistance around these levels? What is the reason behind it?

To answer that I'd like to take you through one of the videos which Vijay recorded a few weeks back. Vijay spoke about the Fibonacci retracement levels in one his videos. Fibonacci retracement levels are very important for traders and one of the most important levels which traders use is the 38.2% retracement level.

Now 38.2% retracement level is an important zone where bear market rallies normally end. So now let's just draw the 38.2% enrichment level on this chart of the Nifty.

So I take the top of the most recent high, which was hit on 14th of February and from there I take the retracement to the lowest level, which was there on 23rd of March. So now you can see on your screen the 38.2% retracement level comes to about 9,320.

Now, this is where the index has found very stiff resistance in the last few days. You can see that the index came in very close distance on the 15th of April. It again hit this level on the 17th of April. It again dropped after shooting above this level on the 20th of April and so on and so forth.

The index has been facing stiff resistance around these levels, and it has finally managed to move above this level on the 28th of April. Now, so you can see that the 38.2% retracement level has acted as a stiff resistance for the markets over the last couple of days. Until it is able to cross this level decisively, we would still say that the retracement level of 38.2% which is placed around 9,320 would act as a stiff resistance for the bulls.

Now, that's not the only thing why this rally is facing stiff resistance. Now I have marked three vertical lines out here. So as you can see, this is the most recent high that the index hit on 14th of February. From there, the index dropped sharply till the month of March. So corresponding to that, if you can see out here, the volumes were rising continuously.

So this indicates that the participants were selling. There was delivery based selling when the markets were falling. Now this is a bearish sign that when whenever markets are falling on high volumes, it indicates that there is selling pressure, and these people who have sold the stock would take a long time to come back.

Now, now let's move to the second part. As you can see out here, this is the point where the market started rallying upward. So corresponding to that, if you see the volume bars below, you'll notice that the volumes were consistently falling on most of the days.

Now, this is a bearish indication. Let me just draw it out for you. Now, as you can see out here, the volumes were consistently low or for that matter, even falling. So this indicates that buying, which we have seen in the markets over the last few weeks, was on lower volumes.

Now there is no rule in the book which says that if the markets are rallying on lower volumes, they should fall immediately. For that matter, even they should fall. It could happen that the markets can rally with lower volumes as well but this rally would be sceptical.

So traders should keep an eye on the volumes as well as this retracement level that the market is currently trading around. If the market is not able to sustain about these levels, which is 9,320 and if it falls and if the volumes also resume then that would be a sign that the rally, which we have seen so far was just a bear market bounce and we would resume trending lower.

So here's and heads up for you. So now you can keep an eye on this Judge and see what's happening going forward and take your trades accordingly.

So that's all from me for today. I hope you enjoyed watching this video and in case you did, then please feel free to like it. Share it with friends and family and don't forget to sign up to our telegram channel. It's absolutely free. We post interesting content regularly over there. So don't miss it.

Thanks a lot and have a nice day.

Stay safe!

Warm regards,

Apurva Sheth
Apurva Sheth
Analyst, Fast Profits Report
Equitymaster Agora Research Private Limited (Research Analyst)

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5 Responses to "Will the Market Rally Continue?"

SUNDARAM

Apr 30, 2020

MAY NOT CONTINUE.

Like 

jaikumar menon

Apr 30, 2020

The rally has peaked today fall can be expected from May series.

Like 

Narendra Prasad

Apr 30, 2020

Enjoyed watching your video.
Useful contents.
Keep it up !
All the best !!

Like (2)

Ratnakumar

Apr 29, 2020


bare market rally may not continue from monday

Like (2)

T K Kuruvilla

Apr 29, 2020

Very good. Keep it up

Like (2)
  
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