NIFTY at critical juncture - Breaking out of Strong Resistance
Nifty has been in a correction for roughly 6 months and now it’s breaking out of the falling channel which coincidently intersects a Strong Resistance at the breakout point.
The significance of a Support & Resistance line increases when the price reverses at the same point multiple times.
This Resistance line on the chart is strengthened at multiple points during this correction (TouchPoints marked on the chart).
The cherry on the cake is that the breakout has not taken the price too far away from the resistance line. We may get a good risk/reward ratio if it sustains above the line.
If the price sustains above 17670, it will continue higher with the nearest resistance at 17800 which can act as a target in a smaller timeframe. The next target at 18350 on a higher timeframe.
The chart may actually form Doji’s or Spinning tops because the Resistance is too strong, and also it is the upper line of the falling channel.
Indicators are flashing green with strong RSI and MACD in positive territory.
One should wait for confirmation of breakout above 17670 before going long.If it fails to sustain above the resistance and forms a bearish candle, it can be a good trade opportunity for sellers.
Disclaimer:
This is not buy/sell advice. Please do your due diligence before making any trading decision or consult your financial advisor.
Sharing my analysis and thoughts for a stronger and healthier community. Cheers
The significance of a Support & Resistance line increases when the price reverses at the same point multiple times.
This Resistance line on the chart is strengthened at multiple points during this correction (TouchPoints marked on the chart).
The cherry on the cake is that the breakout has not taken the price too far away from the resistance line. We may get a good risk/reward ratio if it sustains above the line.
If the price sustains above 17670, it will continue higher with the nearest resistance at 17800 which can act as a target in a smaller timeframe. The next target at 18350 on a higher timeframe.
The chart may actually form Doji’s or Spinning tops because the Resistance is too strong, and also it is the upper line of the falling channel.
Indicators are flashing green with strong RSI and MACD in positive territory.
One should wait for confirmation of breakout above 17670 before going long.If it fails to sustain above the resistance and forms a bearish candle, it can be a good trade opportunity for sellers.
Disclaimer:
This is not buy/sell advice. Please do your due diligence before making any trading decision or consult your financial advisor.
Sharing my analysis and thoughts for a stronger and healthier community. Cheers
Comment:
The Highlight of this analysis is the strong S&R line at 17639.5.
After the price broke out above this line, it gave a Gap Up opening on 4th April due to the HDFC merger event.
Even though the candle formed was big, The rise was apparently not strong because most of it was attributed to HDFC twins.
The price started sliding down over the next three days and closed exactly at the support.
It wasn't surprising that today on 8th April, the price took support at the same level and bounced. This level has acted as an important S&R in the recent past as marked on the chart above.
On an intraday basis, After 10:30, we got a good buy trade.
You might notice that right before the entry candle, an evening star pattern was formed. This pattern was nullified by the next strong candle where we got the entry.
After the price broke out above this line, it gave a Gap Up opening on 4th April due to the HDFC merger event.
Even though the candle formed was big, The rise was apparently not strong because most of it was attributed to HDFC twins.
The price started sliding down over the next three days and closed exactly at the support.
It wasn't surprising that today on 8th April, the price took support at the same level and bounced. This level has acted as an important S&R in the recent past as marked on the chart above.
On an intraday basis, After 10:30, we got a good buy trade.
You might notice that right before the entry candle, an evening star pattern was formed. This pattern was nullified by the next strong candle where we got the entry.
Our strong support level was at 17639.50.
Near the support level, We may get a buying/selling opportunity on an intraday basis (3-15min. chart) depending on the direction the price goes. Let the market settle till 10:30.