Index trend and stocks in action on June 16, 2020

Nifty ended the first trading session of the week with over 1.5 per cent losses but the recovery in the last leg of the trade helped Nifty end the day above 9,800 mark. Only eight stocks of Nifty managed to close in green while, on Bank Nifty, only two stocks were in green.

The price action formed an inside bar as day's range stayed within high-low of prior bar. There were a couple of positive takeaways from Monday’s session. Firstly, Nifty managed to recover roughly 100 points from the day’s low and secondly, it did not breach Friday’s session low or 20-DMA on the daily timeframe.

Going ahead, the level of 9,700 and 9,640 is likely to be a strong support zone for the index and on the upside, Friday’ session high of 9,996 is likely to act as a strong barrier on the upside. For a trending move, Nifty needs to move above or below Friday’s bar.

The 14-period RSI on the daily timeframe is quoting at 54.64 and an interesting observation is seen on RSI. On Friday, despite V-shaped recovery, RSI did not breach 60 mark but in fact, it exactly turned from 60-mark. If we check the range-shift rules of RSI, it indicates that the market may move in a sideways manner i.e. 60-40 or this would be a start of new innings of bear as the level of 60 acts as an overbought condition.

All-in-all, Friday’s session high-low is critical for the market’s further course of action.

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