Nifty: Bears lose advantage; will bulls sign off the week with another ATH?

After showing a consolidation movement with minor weakness in the last couple of trading sessions, Nifty ended Thursday’s session with modest gains of 0.44 per cent at 15,173 levels.     

The broader markets also ended in green with Nifty Mid-cap adding 0.18 per cent while Nifty Small-cap outperforming as it jumped 1.81 per cent. India VIX dropped 3.78 per cent to the 23.05 mark. Amongst the sectoral indices, Nifty Metal, Nifty FMCG & Nifty IT emerged as the top gainers while on the flipside, Nifty PSU Bank and Nifty Auto were the top losers.     

The price action of the day formed a bullish candle, carrying higher high & higher low as compared to its prior bar. Further, Nifty closed above the previous day’s high and with this, it negated a bearish implication of the prior bar. Technically, the formation of a bullish pattern after a re-test of 5-EMA and filling of February 8 gap area could indicate the completion of a minor downward correction, which was seen on February 9-10 and Nifty is signalling that it’s ready for the next leg of upmove. Having said, it would be pertinent to watch out whether the bulls witness a follow-through move or not, as Nifty closed at the resistance line and today, being the last day of the week (Friday), traders usually prefer to go light over the weekend.       

Going ahead, Wednesday’s session low of 14,977 is likely to act as an immediate support level and in the coming trade session, if Nifty slips below 14,977, then the likelihood of weakness extending towards 14,860 levels shall remain higher. On the upside, a decisive break above the level of 15,250 would strengthen the bulls and in that case, Nifty would attempt to touch the levels of 15,450 in the near term.     

On the lower timeframe i.e. hourly, the index is witnessing Bollinger Band Squeeze pattern as the bands are seen contracting. Usually, this phase is followed by periods of high volatility. So, it’s important to keep a close watch on the levels of 14,977 on the downside and 15,250 levels on the upside. A break on either side would lead to a trending move in the index.