Nifty: Failed breakdowns are common in this bull-run

Nifty started off Wednesday’s session with a positive bias. However, soon after opening, it wiped out its early gains and in the second half of the trading session, it came under bear hammering, which resulted in sharp losses of nearly 1 per cent. The market breadth was extremely weak.   

All the sectoral indices ended in red with Nifty Metal being the top loser. Broader markets also ended the day in red with Nifty Midcap 100 & Smallcap 100 losing 0.91 per cent and 0.83 per cent, respectively.   

On the daily chart, Nifty has formed a bearish engulfing-like candlestick pattern. However, it is seen trading above its 20-DMA. As long as Nifty trades above the level of 17,570, we believe that a buy-on-dips strategy would be prudent. The panic drop like the one we had witnessed on Wednesday is quite evident during this bull run but such panic drop has not seen follow-through selling, which clearly indicates that the buy-on-dips template has worked quite well during this bull run.

On the upside, the level of 17,840 should be watched as sustaining above this level would open gates of the 18,000 mark.   

Be with a bullish bias as long as the index trades above the level of 17,570 and on the upside, watch out for the 17,840 mark!