The Index made a new high of 9365 followed by 5 days. It tested 9270 levels on the downside (marked by A and B) and 9370 on the upside. The closing of candle B was so that at this point it seemed that bears were in control and 9270 breakdown was highly likely. But see what happened after two sessions (marked by 'a'), a breakout above 9370. Index had nearly 200 points rally and it formed a new top near 9550. On next day boom!! market opened with gap down (candle b) followed by 5 days of action. Here too the closing of candle C confirmed a breakdown below 9375 consolidation levels with continuing action (fresh short might have been buildup on this day). But next day pop!! markets rebounded with a strong rally (see candle 'c') surely due to short covering and fresh long build ups by breakout traders. Markets had a big rally of nearly 300 points and it made a recent high of 9709.
Now the big question is what next??
During this rally the Index took support at the mid line of the primary channel. And presently upper boundary of sub-channel 2 is acting as resistance. Again a big candle can be seen at D. And again the price action till now suggests that breakdown below 9630 is highly likely. The scenario is somewhat similar to A, B and C levels. But will a breakdown really happen this time?
Well !! that is future and nobody knows future. What we can do is to follow the price action, limit our losses, manage our trades well and take profits whenever possible.
Markets might oscillate with in the range of 9630 and 9709 for a few days. A breakdown below 9630 can take markets back to 9590 (mid line of sub channel 2) or 9475 (the lower limit of primary channel). The zone of 9505-9550 levels can also be a possible support as it is a breakout level and retesting of that level can be expected (looking at the price action in the past markets retests the breakout levels). However, a strong move past 9710 will might ensure 9830-9850 levels achievable.
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