Actually, this is good news. After many days of almost free for all movements, classical chart resistance seems to work. This should also mean that chart support levels will also be respected.
For weeks altogether, the market has moved almost like a drunken elephant, without any clear direction. Finally, the market is adjusting to the new reality of lower prices, cooling down, and, accepting the 'normal' support and resistance levels.
There is strong resistance in the 3200 area. Today, the resistance held, with the Nifty closing below 3000, losing almost 250 points from its intra day high. This is a lot, almost 8%.
Too much Volatility
The market continues to exihibit far too much volatility preventing any kind of low risk trading.
Increased volatility is not a sign of base building which is essential for a bull market to start. My point is: the first signs of a new bull market will emerge when volatility falls. This has not happened yet.
The index, closing below 3000, is not a catastrophic event. The Market has moved 50% from its lows of 2252, in just 8 days. This could not be sustained. Today's decline should be taken as a correction. I assume that the intermediate trend remains intact, although volatile markets can do anything, anytime.
Support for the Nifty will come in a range between 2700 - 2800. If this support does not hold, then we have to step aside, let the market decide where it wants to go. If the support holds, then this should be a dip, which is a buying opportunity.
Why this column is still looking for buying ?
Because there are no signs that the up move is over. Today's decline is considered a correction. As usual, the markets decide, and, we can go wrong.