The Tug-of-War: Conviction vs. Momentum
The challenge of adhering to a specific market outlook intensifies dramatically when significant momentum develops against it. This momentum can be so persuasive that it convinces a broad market of an impending trend change. However, in this scenario, the weakening of that momentum typically precedes a swift and decisive return to the dominant trend, often trapping those who chased the temporary move. The initial strong force then reverses direction with comparable power. In these circumstances, the most effective approach for traders is to respect the current momentum as long as it endures and to execute trade adjustments without delay once key support or resistance levels are violated. Strategies like buying on weakness or selling on strength tend to be unreliable during such momentum-driven periods, adding to the inherent risk. This is precisely why I’ve been advocating for operating with lower trading volumes than usual since the beginning of April.”
Looking at the Indian markets since the April 7th swing low, my analysis of the Nifty index has been predicated on the resilience of key support levels, maintaining a bullish outlook. The fact that these supports have held has validated this perspective, driving the market’s upward trajectory until now. Currently, with the Nifty spot index hovering near a critical juncture, the 23,800 level remains a significant support to watch on a closing basis. Should this level be decisively breached, it would necessitate a reassessment of the bullish thesis and open the door for a potential reversal. My broader expectation for the Nifty to revisit the 21,500 zone by June 18th remains, but this hinges on the breakdown of the aforementioned support. Therefore, while the potential downside target is in view, the immediate focus is on the integrity of 23,800. Until that breaks, the bullish bias persists, albeit with increasing caution. Moving forward, a step-by-step evaluation of price action around this crucial level will dictate the next course of action. Let’s observe closely.”
Frankly, my focus has been more on the Nifty Bank than the Nifty itself. For me, the bounce in banking stocks presented an ideal opportunity to initiate a medium-term short position, particularly in private sector banks. However, the subsequent rally significantly exceeded my most optimistic expectations. A fresh all-time high was an outcome I hadn’t anticipated, but such market surprises do occur, and we must acknowledge them. Consequently, despite this unexpected new high, I maintained my primary bearish outlook. Therefore, the key development this week, following Monday’s gap up, was the speed at which the index filled that gap. Had the gap persisted for several more sessions, it might have suggested emerging medium-term bullish possibilities. However, the gap was closed in yesterday’s session, which immediately negated any potential for a medium-term bullish scenario in my view.”
Navigating the Near-Term: Analyzing Resistance and Support for NIFTY and Bank NIFTY
https://ganninsides.com/2025/04/24/the-session-ahead-watching-key-levels-for-nifty-and-bank-nifty/
“Considering the short-term horizon, my update from last Thursday afternoon indicated that the NIFTY index is nearing a significant high, likely around the 24400 mark on the spot. While this potential peak is in view, the integrity of crucial support levels necessitates a cautious approach, refraining from premature conclusions. The zone between 23800 and 24000 on a closing basis stands out as a pivotal support area. Friday’s trading session proved particularly insightful, as we observed a turning point from the 24365 high. However, for a definitive bearish reversal to be signaled, the NIFTY must decisively close below the 23800 threshold. A break below this level would likely pave the way for a downward trajectory towards 23350, with a further target around 22900 in the subsequent trading days. Conversely, as long as the 23800 support holds firm, the current market posture remains stable. From a time cycle perspective, Friday’s intraday low also carries considerable significance. Looking ahead, the immediate date to watch is May 2nd, followed by a potentially volatile period spanning from May 8th to May 14th, which warrants particularly close attention.”
“The aforementioned dates will be critical for Nifty Bank as well. On the price front, ₹54000 on a closing basis is going to be a critical support level. Once this level breaks, we should see a decline towards ₹52000 on the cash market, and the most significant decline for the Nifty Bank index would occur below ₹52000. Let’s see.”
“Shifting our focus to the S&P 500, we find it currently poised at a particularly interesting inflection point. As I elaborated in a post shared on April 10th, this is a situation worth close observation.”
https://ganninsides.com/2025/04/10/illusions-fade-but-the-ground-remains/
“My analysis focused intently on the S&P 500’s intraday peak of 5481 reached on April 9th. This level initially acted as a significant ceiling, triggering a sharp retracement down to 5100 by April 21st, a date that also aligned with a key cyclical turning point. Following this test of the 5100 low, the index staged a robust recovery, decisively breaking above the prior April 9th high of 5481. Concurrently, the CBOE VIX has receded below the critical 25 threshold. Consequently, the period of heightened volatility following the early April sell-off appears to be subsiding, a stabilization that was crucial. This sequence of events now suggests a potential shift in momentum, prompting us to anticipate the next downward move, one that is likely to retest the recent lows, ultimately breach them, and extend considerably further.”
“The eventual culmination of this upward movement shouldn’t present a major obstacle. My analysis from April 10th pinpointed the 5600 to 5650 range as a likely objective, contingent upon the breach of the 5481 mark. “The unfolding price action will be telling us whether the anticipated downward movement will indeed materialize as expected, following the culmination of the current rally and the potential tagging of the 5600-5650 target zone. Specifically, it will reveal if the recent stabilization is a temporary pause before a resumption of the decline, potentially leading to a retest and subsequent breach of the recent lows, thus validating the bearish outlook.”
“Shifting our focus to the timing, key cyclical turning points are anticipated around April 30th and May 1st. Moreover, the broader window spanning May 8th to May 14th suggests a high probability of noteworthy developments impacting market participants. The unfolding dynamics within this timeframe warrant close scrutiny.”
Ultimately, the unfolding price action will validate or challenge the anticipated scenarios outlined for both the S&P 500 and the NIFTY. Our analytical framework, emphasizing key support and resistance levels alongside cyclical turning points, provides a roadmap for navigating the complexities of the coming weeks, demanding vigilance and adaptability.”
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