Will bulls finally break the shackles of resistance?
On Wednesday, Nifty witnessed yet another gap-up opening, and it filled the opening gap during the day. As weekly options expiry was scheduled on Wednesday instead of Thursday, the option writers were busy capturing the theta value.
The price action of the day formed a small-bodied bear candle with a long lower shadow, which resembled a hanging man candlestick pattern near the resistance area. It’s still within the broader range of 14,862 to 15,273.
In the coming trading sessions, a decisive move above the 15,273 mark could lead to a trending move in an upwards direction and it may test the level of 15,430 in the near term. Meanwhile on the downside, the 5-EMA and Wednesday’s low, which stands at 15,072 and 15,100 levels, respectively, are likely to offer support in case of a pullback.
The +DMI moved above the -DMI, and it is seen rising, which is a positive sign. However, the ADX is still in a declining trajectory, which shows that the strength is yet to pick up. Interestingly, on the weekly chart, the positive movement indicator i.e., the +DMI is at the lowest level since Budget day. The daily RSI is forming an inverted head & shoulders pattern. Watch out for the level of 60 closely as a move above this level will lead to a resumption of an uptrend after a decent consolidation.
Bollinger Bands are still moving at a parallel distance. As Nifty is above the 20-DMA, be with a positive bias as long as it trades above it. The MACD histogram shows that the bearish momentum has declined significantly.
A decisive move above 15,273 will give a big boost to the bulls to resume the uptrend. The major indicators are showing different pictures on the daily and the weekly charts. Even the MACD histogram is declining and is about to move below the zero lines. There are several contradicting signs, which have not given any clues about the near future direction. As Nifty has not formed a lower low, we cannot be completely bearish until it breaks below the level of 14,467.