The NIFTY may have made an intermediate low, a bullish bounce back is possible. This is the message of many days of volatile trading, culminating in a big selloff in world markets on wednesday, and, a large gap down to 3800 in India (and subsequent recoveries in all markets)
The Nifty may have made an intermediate low as it bounced back from 3800 levels to close above 4000. While the index remains inside the larger trading range between 3800 and 4600, it does give the impression that the short term trend may be up. The long lower shadows in the Nifty on three different days including today suggest an upbeat market.
Traders and investors should make attempts to buy on dips. Always keep stops. Resistance will come in at 4200, and support comes in at 4000. The larger trading range between 3800 and 4650 is intact.
A new trading range may be developing if 4200 resistance holds. Then, we will be looking at a range between 4200 and 3800.
This is not the end of the bear market. We are looking at a possible intermediate up trend like the one we saw in late July - early August. These are rallies in a bear market.
Rules to survive in the volatility.
Trade less. If you have the capacity to trade 500 Nifty, then trade only 200. Never think that you are going to 'recover' any losses made earlier. This leads to overtrading.