Nonetheless, the index continued to form higher highs and higher lows and analysts believe one should not see Wednesday’s session as a sign of trend reversal. The index needs to stay above the 10,050 level before it sees any bounce towards the 10,200 level.
On Wednesday, the index hit a high of 10,131 before closing the day at 10,079, down 13.75 points, or 0.14 per cent. The index is still trading above most short-term moving averages and the MACD indicator, too, has been positive, so far.
“The rally from the low of 9,685 is an upward corrective run and not a fresh leg of uptrend. Here after, the Nifty can reverse the course of action at any point of time. On Thursday, if the index trades below 10,163 level for at least the first hour of trading, selling pressure may build up,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.
In such a case, the index may be back in the corrective orbit.
“Contrary to this, if the index manages to take out the 10,137 level, this pullback rally shall get extended up to 10,205. Traders are advised to remain cautious and maintain a tight leash,” he said.
Chandan Taparia of Motilal Oswal Securities said the index made a ‘Spinning Top’ on the daily chart, but it has been making higher highs and higher lows for last three sessions.
“The broader market trend is intact. If Nifty50 stays below 10,050, profit booking could drag it towards the 10,000-9,980 region. On the upside, a decisive move above the 10,138 level could commence the next leg of rally towards 10,200, and then 10,350 levels,” Taparia said.