Analysts said one must not jump the gun, as other technical indicators are still not in favour of the bulls. They believe the broader consolidation range at 15,600-15,900 stays intact.
Mazhar Mohammad of Chartviewindia.in said despite the intraday recovery, the advance-decline ratio decisively remained skewed in favor of the bears.
“Moreover, the gains did not significantly improve indicator/oscillator set up in favor of the bulls. Hence, it can be safe to assume that Nifty50 is still stuck up in a trading range, with upsides capped around 15,900 level,” he said.
For the day, the index closed at 15,709.40, down 37.05 points or 0.24 per cent. The index has been forming lower highs for last four sessions but is holding above its 50-day moving average.
Chandan Taparia of Motilal Oswal Securities believes the index needs to hold above 15,700 to witness an up move towards 15,800 and 15,850 levels. He sees downside supports at 15,600 and 15,500 levels.
Manish Shah, Founder at www.Niftytriggers.com said the index hit the 78.6 per cent retracement of 15,450-15,950 rally intraday.
“The pattern playing out is a “Gartley Harmonic” pattern. The sharp rally from the low was a Hammer or a Pin Bar. Pin bars are bullish patterns that signal active buying interest at the lows,” he said.
Shah also believes Wednesday’s action was a continuation pattern. “When the breakout does manifest, chances are that the breakout will be on the upside. Nifty is showing tremendous resilience against the odds. We are in a well-established range that points out to a simple strategy of buying Nifty50 around 15,500 and sell around 15,950,” Shah said.
