Nifty trend and stocks in action on September 16, 2020

Nifty recouped its previous day losses and ended the day above the important psychological level of 11,500. However, the action was lacklustre one for the majority part of the day as it was only in the last leg of the trade that the bulls marched higher and closed near the day’s high.

The price action formed a small body bullish candle. Further, as the price action remained within the high low range of the previous bar, it led to the formation of an inside bar pattern. As a result of this, the high and low of Tuesday’s session would be critical in the coming session, which means that the range of 11,536-11,442 is crucial for Nifty.

Let’s move into a lower timeframe and check how the price action was on the lower timeframe. In the lower timeframe i.e. 60 minutes, a wide range bullish bar was missing despite the fact that Nifty closed higher and above the 11,500 mark. This is clearly indicating that the confidence or the momentum is clearly missing from the bulls. Further, supporting this thesis is that the price failed to move above the previous day’s high in spite of the participation from the banking sector stocks. Also, if we look at the bullish bar in recent times on the daily timeframe, whenever there is a bullish day, the bar size is smaller than the bearish bar. A similar situation was seen between October 2019 and January 2020 and we all know what happened after that.  

Having said that, we cannot go aggressively short in the market as a follow-through selling has been missing. Further, Nifty took support at 20-DMA for the third consecutive day. Basically, if we sum-up the current scenario, there is no conducive evidence of a decisive trend as whenever Nifty get close to the resistance zone of 11,565-11,585, the bears take it down but as Nifty nears its 20-DMA, the buyers come alive. So, it is a range-bound phase of the market, where the sellers and buyers, both are fighting hard. A decisive trend could be seen only if Nifty breaks above the resistance of 11,565-11,585 while on the downside, close below the 11,300 levels.

Our advice to traders would be to look for opportunities in the leading sectors as well as the leading stocks as there are ample of stock-specific opportunities available for trading. Talking about index trading, wait until there is a clear trend in the picture.  

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