The NIFTY 50 is an index that benchmarks India's stock market index representing the 50 of Indian's top public companies in 13 sectors. The NIFTY 50 is about to have their worst monthly of the year and the chart suggests there is more downside risks.
The NIFTY 50 just closed below the 200 exponential moving average (EMA - yellow line). The 200 EMA is considered a key indicator by traders for determining the overall long-term trend. 200 EMA also used as major resistance line when price is below the 200 EMA.
Price is on the verge of breaking down and below the long up trendline dating back to 2016. Trend traders will now start to come out from under their rocks and look to short the NIFTY 50 once they receive confirmation.
Although divergence is not an indicator based on a mathematical calculation, I believe it’s one of the most powerful indicators to a trader/investor.When people talk about divergence they are referring to the difference in movement between an oscillating indicator (i.e. MACD, CCI, RSI, Stochastic, etc.) and the price action.
Negative divergence occurs in an uptrend when the price action makes higher highs that are not confirmed by the oscillating indicator. This indicates a weakness in the uptrend as buying is less intense and selling or profit taking is increasing. And when negative divergence happens on monthly chart, watch out.
Thus, one possible set-up is if price can drop a bit more, it would have formed a nice daily supply zone at 11,300. Thus, my projected price action projectile is the following to 10,000, which happens to be a major support line and a psychological round whole number.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.