Ok. Finally the Verdict is Out. Markets have really been strong and we have definitely broken the downtrend. Look for good weeks ahead.
Positives
- All indicators maintaining their uptrend.
- MACD Cross above 0.
Negatives
- None in particular. Still extremely Overbought.
After a few weeks of "Do Not trade" and "have patience" words, we mentioned in our previous newsletter that last week(week ending 27th May) would be a decisive week. And it really was. We also clearly stated to go LONG if we broke the 6500 level. Which was decisively broken last week. Since we have left the 50 DMA way back and have never looked at it again, there is every reason to believe that we are now in a Bullish zone. The downtrend and downward waves are over and it is now time to create the upward waves.
Outlook
Ok, we are again at the most difficult question. What would happen in the coming week. Since we broke past all resistances and key levels and moving averages, we are in a good strong bullish zone. But at the same time, we are Extremely overbought. As much as we would want to go long, we are tempted to go Short too. Short, Not because the market might go down. But because a correction is long due. Again, if we look back. Indian markets have a tendency to stretch the overbought-ness to few weeks. So what do we do. Since a Correction is due, it is advised to go Long only with strict stop-losses around the strong support levels. We would strongly suggest you trade only in the second half of the week, by which time we expect some correction to have happened or to start.