Will bear extend its stay on D-Street? Levels of 14,970-15,000 crucial to watch out for!

Nifty snapped its three-day winning streak on Thursday as it ended the day lower by 164 points.

It opened the session with a downside gap of 224 points and as the day progressed, Nifty exhibited an intraday recovery from the lows but witnessed selling again from the highs in the last leg of the trade. Both the institutions sold on Thursday with FIIs & DIIs turned net sellers to the tune of Rs 223.11 crore and Rs 788.19 crore, respectively.     

The price action of the day formed a small-bodied bullish candle with a large upper shadow. The last one week in the market has been all about gaps as in each of the last five trading sessions, we witnessed either the opening of a gap-up or a gap-down.     

The weekly series opened with a gap-down and registered 'Black Friday’ with a loss of more than 500 points. Last Friday, Nifty opened with a 209-point gap-down and lost i.e., ended down by about 567 points. The next three days’ gap-up openings helped the index to fill Friday’s gap. However, on Thursday again with a 224-point gap-down opening, it wounded the long positions badly. This means that the two days of huge gap-downs and three days of the gap-up opening created jitters among the positional traders.  

Technically, from expiry to expiry (last Thursday’s close to this Thursday), Nifty has lost about 16 points. However, it has witnessed almost 800 points move from last Friday’s low. Also, Nifty has registered a failed breakout as on Wednesday, the index moved above February 25 swing high, but, on the very next day i.e., Thursday, Nifty opened lower and stayed below that level. To resume the uptrend, it needs to close above the 15,176-15,273 zone of resistance. While on the downside, a close below the prior day’s low would empower the bears and they would begin dominating the market.    

Interestingly, Nifty witnessed a surge of about 5.5 per cent from last Friday’s low to this Wednesday’s high, but the ADX remained below the +DMI and -DMI and it is continuously declining. MACD histogram failed to enter the positive territory. This structure shows that the strength in the trend was not enough to push the price to new highs.     

Going ahead, keep a close eye on the RSI level of 60. If the RSI moves above 60 on a daily closing basis, then Nifty could turn positive. On Wednesday, it faced resistance at 60. On Thursday, Nifty formed a long upper shadow small body candle, resembling a shooting star. In any case, if it closes above 15,176 on Friday, the previous week's bearish engulfing implications would still be valid for the next week as the weekly bearish engulfing candlestick pattern high is at 15,431.75 and the implication of bearish engulfing would only start to wane if Nifty closes above the level of 15,431.75. As the market has turned highly volatile, it is better to avoid aggressive positional trades.