Not So Nifty 50
Featuring Vishal Mehta
Published on: April 8th, 2019 • Duration: 5 minutes • Asset Class: Equities • Topic: Trading, Technical AnalysisIndependent trader Vishal Mehta, CMT, joins Real Vision for his very first “Trade Ideas” interview to analyze the technical setup in the Nifty 50. He runs through the charts, notes key levels traders should pay attention to and reviews how to make the play. This interview was filmed with Jake Merl at the CMT Symposium in New York on April 4, 2019.
JAKE MERL: Welcome to Trade Ideas. I'm Jake Merl, sitting down with independent trader Vishal Mehta. Great to have you on the show.
VISHAL MEHTA: Great to be here, Jake.
JAKE MERL: So we're here at the CMT Symposium in New York City. And this is actually your first time on Real Vision, so great to have you on the show.
VISHAL MEHTA: Sure.
JAKE MERL: And so I just wanted to ask, before we get into your trade idea, is if you could please go over your background, who you are, and what you do.
VISHAL MEHTA: Sure. That's great. So my name is Vishal Mehta. I'm from India. And, as for qualification, I'm a chartered market technician and I'm a charter head for India. As for my work experience, I worked with quite a few software companies, mainly focusing on charting in India. It's like expired a software, reliable software, and the multinational companies like Bloomberg. I was with Bloomberg for about six years. And with Thomson Reuters for about six years. And now I'm an independent trader.
JAKE MERL: Great. And so with that in mind, what are you looking today in the markets?
VISHAL MEHTA: So we have a very interesting setup being formed right now at Nifty. So we are looking to short Nifty. At the current levels it is around 11,640. We are recommending a short at 11,640 with a surplus of 11,750, with a target price of 11,200 and 11,000 and in about a month's period.
JAKE MERL: So what's the technical setup look like right now?
VISHAL MEHTA: So what we can see from the chart, that there is a parallel channel going in the Nifty kind of stock. So what we can see is that at every major bottom there is support coming in. At the top end of the channel we are seeing a resistance coming in. And the most important part of it is when we are reaching the top end of the channel, there are small real bodies. So when we talk about the catalystic charts, we see the small bodies with the large shadows, which actually talks about indecision in the market.
So we had a big relief from the March. And we are seeing a bit of tiredness from the bullish perspective and with the upward channel that is coming over there.
JAKE MERL: So are you looking at this purely from a technical perspective? Or are you also looking at the fundamentals as well?
VISHAL MEHTA: So currently, I'm looking at the technical perspective, but there is another angle from a political angle that we are looking towards to it. There was biggest democracy, which is India, is going to go into an election. And it is not unusual for Indian market to have a pre rally before the election. And there is a tendency when the election results are out, there tend to kind of fall off.
So there is another technical perspective, also, that I wanted to kind of add towards this. We are looking at another angle of an Elliott Wave, which from the last rally of March, what we can see we are at like a five-impulse pattern. And usually when those kind of patterns gets completed, we have a fall off in ABC, which is also kind of coming along.
JAKE MERL: So what are the key levels you're looking at for this trade?
VISHAL MEHTA: So the key levels that we are definitely looking at is, once the 11,640 has been breached on the downward side, may put a stop loss at 11,750. And we have a target of 11,200 to 11,000.
JAKE MERL: And so what would you say is the biggest risk to this trade?
VISHAL MEHTA: The biggest risk that we are looking at this is market is in a clear uptrend right now. So we are taking a contrarian trade away. But the best benefit that we are having is the all time high coming to 11,750, which has also acted as a resistance in the past.
JAKE MERL: So what's the time horizon for this trade?
VISHAL MEHTA: So the time horizon, there is an interesting set up that we have been seeing right now. If we go on the chart, and that is in movement from late August to the March. It took about 158 days to reach the top. And we have a similar set of being formed right now, which is reaching at the 150. In the past, it took about a month's time to reach those levels of 11,000.
So we are assuming that media image is going to follow it. So in about a month's time we would see those levels coming in.
JAKE MERL: Vishal, it was great. Thanks so much for joining us.
VISHAL MEHTA: Yes, pleasure all mine.
JAKE MERL: So Vishal is bearish on the Nifty 50. Specifically, he suggests shorting it at 11,640, with a stop loss at 11,750, and a target price of 11,000 over the next month. That was independent trader, Vishal Mehta. And for Real Vision, I'm Jake Merl.