The RBI policy was taken positively in the following hour, after the initial sell-off in the first half. However, the index failed to breach the previous day's high of 21940 and cooled off to settle above 21500 and 1 week's EMA
at 21630. The day closed with a classic doji
, suggesting a large candle on either side, giving a clear breakout of an important level will decide the trend for the index. As of now, the Stochastics is still positive and further up move cannot be ruled out.
On the upside, beyond 21865, the index will need to sustain above 21900 to move to 22050 and 22120 ( 50% retracement
of recent fall).
On the downside, below 21450, the index will try and test 21375, a breach of which will take it down to 21200 odd levels. If it fails to sustain 21200, there is a high probability that the index will move to breach 21000. A successful attempt at the latter will signal a bigger correction in the near term.