Despite facing glitch, Nifty logs massive gains & negates formation of lower highs!

Wednesday turned out to be a wonderful day of trade for bulls as Sensex registered four-digit gains. Nifty too logged triple-digit gains and closed just shy of the important psychological mark of 15,000.  

However, it was a very unusual day of trade as India’s largest stock exchange, NSE halted trading in the cash & derivative segment, following a technical glitch at 11.40 am and resumed at 3.30 pm. As the trading resumed on NSE, the market flourished hitting the psychological mark of 15,000 and it closed near the day’s high at 14,982, up by 1.86 per cent.   

The price action of the day had formed a sizeable bullish candle, which negated the formation of lower highs of the last five trading sessions. Technically, if we understand the formation of the candlestick pattern of the last three days, it signals the formation of a bullish reversal pattern. February 22 was a sizeable bearish candle, followed up by an inside bar on February 23 while February 24 was a sizeable bullish candle. However, a follow-through move would be required to confirm this reversal pattern.  

Nifty has reclaimed its 20-DMA and it is trading nearly 1 per cent up from its 20-DMA. Further, the 20-DMA has started to trend upwards. Going ahead, the level of 15,040 is likely to act as an immediate resistance, followed by 15,127 levels, which is a 61.8 per cent retracement level of the current downmove. On the downside, the level of 14,848 is immediate support for the index as the 20-DMA is placed around these levels.   

Interestingly, the directional indicator i.e. the +DI has started to trend up while -DI has is trending down, which indicates that the bulls are back in the driver seat. However, the MACD is in a bearish mode as it stays below its signal line.   

Considering that the derivative expiry of February month contract is due on Thursday, expect volatility to be high. Also, maintain risk management principles.