Stabilization Started!

Wednesday’s mad rally at the close and Thursday being a bulls-hit day, I being absent from desk felt relief by staying away from the markets. What happened on Friday was interesting. The market rallied again even when the Asian and European markets took a hit. That is typical of what is technically called consolidation.

One day down 6%, then up 6%, then down 5%, and finally now up 3%. If you plot it, it takes the shape of a triangle pattern showing that the market’s intraday range is narrowing around a central point. That could be 3980 for Nifty. Also it is indicative of possible intermediate bull market in the near term. For all the trend traders, this is the time to watch closely and start the next ride.

If somebody remembers, this kind of thing happened almost exactly in January after great falls. On Tuesday big fall, then on Wednesday up by 10%. Then on Thursday down by a big amount. Then consolidation started by being up on Friday. There were three consecutive down days with narrow intraday range in the next week till Thursday. Then came the bright and white candlestick on Friday that decisively signaled the next intermediate uptrend. I cannot forget this due the profits I made from this opportunity which negated large part of my losses from the January crashes.

Same thing can happen now. To ignore it or miss it is foolishness. As common sense tells that we cannot take excuses for known things.