Owing to unfavourable global cues, Nifty opened the session with a negative bias. However, it took support at lower levels and bounced back while, ending the session with modest losses of 0.68 per cent at 10,312 levels.
The price action formed a doji candle as Nifty closed near its opening level. In the last three trading sessions, we have witnessed how Nifty has opened lower and bounced back from lower levels. This clearly indicates that though the momentum is waning but it has inherent strength.
Now, let’s move to lower timeframe chart to see what the situation is over there. On the hourly timeframe, Nifty opened below 20-DMA and throughout the day, it resisted at its 20-DMA. Hence, going ahead, a follow-through move above Monday’s high could lead the index towards the mark of 10,400-10,410 as 61.8 per cent retracement level of the recent decline is placed in this zone and also, the valley or neckline of double bottom is placed in this region. Hence, this would act as an important short-term hurdle on the upside. On the downside, 10,200 is a crucial support level for the index.
Interestingly, a set-up was seen in the RSI, which on the daily timeframe, ended below the prior swing low i.e. June 25 whereas, on price, June 25 low of 10,194 was protected and this resulted into a formation of hidden divergence while, on the lower timeframe i.e. 60-mins, RSI took support around 40-mark.
All-in-all, Nifty at present, is trading in a range of 10,200-10,400 and a move above or below, could give the traders an opportunity to take a directional or else, buy on support and sell on the resistance is the best strategy for traders in this environment.
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