INSUBCONTINENT EXCLUSIVE:
On expected lines, Indian equity market staged a strong relief rally on Tuesday
NSE Nifty made a healthy start to the day and continued to add gains as the session progressed
The benchmark index finally settled with a massive gain of 708.40 points or 8.76 per cent at 8,792.20.
The market has now started to show
initial signs of a short term bottom near the 7,800 level
However, Nifty still needs to confirm it by moving past and sustaining above the 9,050 level
The behaviour of the index against this level would be extremely crucial to watch out for in the coming days.
Volatility Index or India VIX
The 8,885 and 9,000 levels will act as resistance, while the support may come in at 8,710 and 8,590.
The Relative Strength Index (RSI) on
the daily chart stood at 43.44 and marked a fresh 14-period high, which is bullish
The indicator remained neutral, showing no divergence against the price.
The daily MACD was bullish and traded above its signal line
A rising window was formed on the candles
This occurs due to a gap and usually results in a continuation of the upmove.
As per pattern analysis, after making a low below 7,800, Nifty
has attempted to confirm the temporary bottom by marking a higher bottom near 8,050
For the bottom to get confirmed, the index now will have to mark a higher top by moving past the 9,050 level and staying above this
zone.
Given the technical setup, we would strongly recommend traders to avoid shorts at current levels
While selective purchases can be made, profits should be vigilantly protected near the 9,000-9,050 zone
There are chances that Nifty may test 9,000, but in the same breath, the index may also face some profit booking at higher levels.
(Milan
Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research - Advisory Services, Vadodara
