The Nifty50 witnessed a stellar 8% move from 21,964 to 23,700, changing sentiment from fear to hope. The fast and furious reversal potentially indicates the resumption of the trend for investors. But for traders is this an opportunity to book profits on leverage longs?
“Success in trading isn’t about hitting the home run every time, but about consistently booking profits, one small step at a time.”
While some may argue that a trader should ride the rally, we have a reason to book profits.
1. Fibonacci Time Cycle Theory
The 13-week Fibonacci time cycle theory signals a reversal or a pause in momentum in the next week while the 13-day Fibonacci Time cycle signals a reversal or a pause in momentum on 27 March 2025.
Consider +/—2 days. A reversal or pause in momentum can be expected between 27th March – 2nd April. Being a trader, it is important to take profits off the table.
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The Golden Cross and Death Cross quantifiably defines the bullish and bearish trends on the charts. The Golden Cross is Bullish when the 50 DEMA is above the 200 DEMA, and vice versa for the Death Cross, which is Bearish.
- On Nifty50, 34 out of 50 stocks are still in the death cross, which means 68% of stocks define the bearish market breadth.
- On a broader market, the Nifty500 still shows that the bears are in control, as 78% of stocks are in death cross.
There’s something for the Bulls Too…
On the daily chart, the index has broken out of the falling trendline at 23,200 and rallied to 23,700.
Nifty Daily Chart Source: TradePoint
In technical analysis, retests are considered the strongest breakouts, and if a reversal occurs, a retest of 23,200 may be on the cards.
The recent hurdle at 23,700 on the chart and 24,000 as per the Open Interest indicates the bulls may be tiring in the zone.
Here are three potential F&O stocks that have potential bearish setups…
- Indus Ind Bank
Source: TradePoint
The stock price of IndusInd Bank broke down from the previous base after the recent gap-down.
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