What happened today?
Why Nifty bounced?
The simple explanation:
Because we are in a Bull Market and in Bull Market - market participants usually Buy the Dips. I covered that in my yesterday tweet
Nifty: Where are the dip buyers? pic.twitter.com/BCJ5iePCvV
— Deepak Singh (@smarket) October 17, 2016
It's not this even a few days back I wrote a note stating why Nifty at 100 dma appears attractive.
wow so do I know how to forecast market?
No Absolutely Not. I know for sure that nobody knows what market will do in future. As Price Action followers, I only believe in one thing that you should trust the trend. It means if the trend is up - dip buyers will come near support and take the market higher. I made that call on Feb 14 also based on the above theory - Trust the trend.
Nifty is right now standing at the ULTIMATE support level https://t.co/Mkf9KW8SsH
— Deepak Singh (@smarket) February 14, 2016
When you TRUST THE TREND, you only increase your odds of success.
What does TRUST THE TREND means?
It means TRUST when things are looking bad. Let's say you trust your friend but then some so called well wishers of yours start feeding you with all sorts of negative news in your ear to shake your faith in your friend. You know deep in your heart that you can count on your friend based on personal experiences. It is at that time you are tested. How strongly you trust your friend will decide whether you stick with your friend or get carried away by negative news feed.
The same logic applies in the market - How strongly you have faith in uptrend will decide how you are going to act when it matters the most i.e. Nifty at important support areas. Trust me, you will find that trust at these bad times turn out to extremely rewarding. The problem: When Nifty is at important support - the media turns so bearish that it prevents one from doing the right thing.
Having said that - Never have a blind faith in anything. Trust should always be based on personal experience and what you can see with your own eyes. So, if you trust the trend, but market starts breaking support - then you need to suspend your TRUST but getting carried away by negative news flow before your trust has been broken is STUPID. Just imagine how many times Bears have screamed in last 10 months on OH this is not for real and one should avoid buying the dips.
In the markets, you are not rewarded for forecasting but amply rewarded for just being sensible and trustworthy of trend when things are not looking good. Trust matters not when everything looks good but when things appear ugly. I hope you understand my point. Do let me know your views
Read More: What is a Technical Turnaround?
This is my view and you are free to disagree