Markets are becoming extremely volatile struggling to sustain above 5,400 and 17,800 since last three days. Short term indicators are becoming weaker while indices are trading in small band of 5,320 – 5,415. This range bound volatility could be considered as pause after a rally of more than 12%.

On having a very close watch on averages, oscillators and volumes if the Sensex trades below 17,575 and nifty below 5320 we can expect markets to fall further down to 17,400 and 5,250. From charts perspective further there is a sharp rising trend line supporting the rally from 15400 and that will break if Sensex trades below 17400 and nifty below 5250.

Looking at Asian markets and SGX Nifty, we are likely to see a gap down opening today. Last three days volatility indicates that if now nifty manage to cross 5415 we can see a very sharp rally towards 5475 or even more and on flip side fall below 5250 will start much awaited correction.

Traders should remain cautiously optimistic and stock specific while trading with strict stop loss.