Nifty trend and stocks in action on September 10, 2020

Nifty witnessed an ugly start to the day and at one point in time, it breached 11,200 levels on an intraday basis. However, it took support around the 50-DMA and recovered most of the lost ground to end at 11,278, courtesy a smart rally seen in the index heavyweight-Reliance Industries.

The price action of the day formed a bullish candle as the closing was greater than the opening. One key interesting observation on Wednesday was after a gap down opening, the index filled its opening downside gap and the price revisited its prior session low.

On the lower timeframe i.e. on the 60-minute chart, Nifty is forming a falling wedge pattern and sustenance above the level of 11,350-11,360 would result in the breakout of this pattern. Further, there is a divergence seen on RSI in the same timeframe. Hence, in the coming trading session, it is important to see whether Nifty holds above the 50-DMA, which is placed at 11,154 or not. A failure to hold above this level would result in a correction towards the levels of 11,111 and 11,070. While on the upside, the zone of 11,350-11,380 is a crucial resistance and it would be a mighty task for the bulls to pierce this zone.

The –DI is moved above the prior swing high and it’s in a rising trajectory. Further, -DI is above the ADX, and +DI is not a good sign for the bulls.

So overall, the trading range of the day is set between 11,154 and 11,380 and any pullback towards the higher end of the range would provide fresh selling opportunity to trade, for those, who may have missed shorting earlier. Similarly, at the lower end of the range, the risk-reward would be quite favourable for the long position.

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