The move was strong and across the board. As the Nifty continues to mark new rising highs throughout the day, the headline index closed at a very strong note, posting a strong rise of 417 points (+ 2.63%).
It has finally seen a strong rebound from the ‘Double Bottom’ pattern support. The indicator also holds and verifies the support area of 15,700-15,750 levels in the chart.
The region has so far remained a strong near-term support for the market. These levels need to be secured if markets need to expand their pullbacks and avoid growing vulnerabilities again.
The pullback was across the board as the Nifty50 ended with all 50 stock gains. The wide market width was also very strong in the expected line.
Wednesday’s levels of 16,330 and 16,485 are likely to serve as immediate resistance points. Support comes in at 16,160 and 16,030 levels The trading range is likely to be wider than usual.
The Relative Strength Index (RSI) is at 40.86. It has moved above 30 from an oversold situation which is bullish. It is neutral and does not show any difference in price. The daily MACD is still bearish and below the signal line.
A large white candle appeared on the chart. It points in the opposite direction to a strong move and shows the directional consensus of market participants that dominated the trend for the day.
All in all, from a technical point of view, the Nifty holds and verifies a support zone of 15,700-15,750 levels. The region is expected to lend strong support to the market in the near term. In addition to this, if the technical pullback continues, the zone between 16,480-16,620 should be seen as it is a gap that was created a few days ago.
In other words, if the technical pullback continues, the Nifty could immediately find resistance at the 16,480-16,500 level in the near term. It is strongly recommended that one must be highly stock-specific when approaching the market, without following any specific sector or theme.
It will be fruitful to focus on stocks that show some downward confirmation in place and show relative strength in the larger market. A cautiously positive approach is advised for the day.
(Milan Vaishnav, CMT, MSTA, a consulting technical analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and based in Vadodara. He can be contacted at [email protected])