Nifty Outlook 7th May

Nifty again took support at lower level but this breached our mentioned level of 5041 but ultimately rebounded from a bit lower levels.

Now the last two day momentum showed that Nifty is very weak internally but is finding support at lower levels.

Using the principal of double bottom we can assume that Nifty will again rebound from the level of 5021. But in case if this level is breached then it will create a lot of panic selling in the market.
Nifty may finally settle anywhere near 4925 or 4870 level which are some the most important support levels for Nifty in the near term.
After showing a complete rebound of approx 90 points Nifty settled a tad lower.

Now both traders and investors are in a lot of confusion whether to sell or accumulate in the lower level.

We try to answer this using one the most important tool of technical analysis that is Fibonacci retracement levels.

In the last 4 months Nifty hit low of 4687 and high of 5398.

Three important retracement levels which are also point of reversal are as follows

Level 1: 5126
Level 2: 5041
Level 3: 4958

We can also use Fibonacci level as very huge support levels and trend reversal levels.

Since Nifty took support almost from 5041 level we can be a bit confident that intermediate low has been made and Nifty should rise from here.
One caution needs to be taken here is that Nifty breaches 5041 once more and then close below it then we must see much lower levels and Nifty may go on to test 4958 or even 4925 and then 4870.

So buy on dips to book profit or loss as the trend of Nifty swings.