Level of 14,100-14,110 may act as strong support for Nifty

Nifty witnessed a selling pressure for the second consecutive session on Monday. It opened the session at 14,453.30 and soon, made an intraday high of 14,459.15 but failed to sustain at higher levels and slipped.  

During the afternoon session, the index made an attempt to trim its losses; however; it turned out to be a failed attempt as sell on the rise strategy was adopted by the traders. As a result, the index fell sharply in the final hour of the trade and ended the day with a loss of 1.06 at 14,281 levels.  

The price action of the day formed a bearish candle, carrying lower high & lower low as compared to its prior session, which indicates a follow-up selling in the index. Further, on the way down, the index has broken the key short-term moving average i.e. the 8-EMA. Now, both the short-term moving averages i.e. the 5-EMA and 8-EMA are trending down. Going ahead, we believe that the index has a strong support base around the levels of 14,100-14,110 as it is a confluence of 38.2 per cent retracement of the current upmove (13,131-14,653), the rising 21-EMA and the upward sloping trend line, formed by connecting lows of October and December. 

In the last corrective decline as well, we saw Nifty reverting to its mean i.e. the 21-EMA and inching higher. The index is likely to repeat history i.e. scaling higher after reverting to its mean and along with this, the 14-period RSI is approaching near its 60-mark. As in the super bullish range theory of RSI, coined by Andrew Cardwell, the RSI refrains from dipping below 60. It oscillates between 60 on the downside and 80 on the upside.

Hence, intraday traders can use any dips towards 14,100-14,110 to initiate a long position as this would offer traders, the best possible risk-reward trade. In the coming days, we believe that the index is likely to oscillate in a broad range of 14,100-14,500.