Nifty trend for Thursday

The bulls have ingrained a habit of creating new lifetime highs as Nifty once again closed at record high levels. The cues from the Asian markets provided a perfect pitch for the bulls to bat on and as a result, Nifty opened with a gap-up but it soon pared its gains and took support around its 5-EMA. After taking support around the 5-EMA, the bulls bounced back strongly to end near the day’s high.   

The price action of the day formed a Dragonfly Doji like candle. In recent days, we are seeing a clear pattern emerging in the markets as in after opening on a positive note, Nifty cools off from its higher levels. This cool-off provides a trade opportunity to buy-on-dips and traders are grabbing this opportunity with both hands as in the second half of the trading session, the market witnesses a strong rebound. On Wednesday too, soon after the initial momentum, the bears took centre stage and dragged Nifty lower but failed to take it down as Nifty did not breach its prior bar low. It took support around 5-EMA on the daily chart and 20-hourly moving average.   

Interestingly, on the hourly chart, during the cool-off mode of Nifty, the RSI on the hourly timeframe did not move below the 60-mark, which led to the formation of a super bullish range and thus, the RSI tends to oscillate between the zones of 60 and 80. Let’s look at the ADX on the hourly chart. The ADX is in a rising trajectory and it is above the 34 mark, which indicates that the trend is strong and the +DI took support around the 26-27 levels and bounced further, which indicate that the bulls are in the driver's seat.  

Going ahead, the level of 14,000 would act as an immediate resistance as this is a round number and any sustainable move above the 14,000 mark, could lead to the 14,200 mark. On the downside, Monday’s gap area (13,771-13,811) is likely to act as an immediate support level as it coincides with the previous all-time high of Nifty.   

Let us look at the rollover day. The rollover data of day 1 before the expiry for Nifty was at 57 per cent while Bank Nifty was at 51 per cent. Nifty and Bank Nifty rollover 1 day before the expiry declined as compared to the last month. For Nifty, the rollover declined from 63 per cent to 57 per cent and for Bank Nifty, it fell from 57 per cent to 51 per cent.  

Overall, the bias remains positive as there is no evidence of any sort of weakness on the chart. We reiterate that you should remain in tune with the trend. However, volatility could be seen on the eve of December series expiry.