The broader market Nifty 50 index is looking to pare some of the losses that were incurred after a drastic fall on 5 August 2024. Since then the index has been facing a strong resistance at around 24,400. There have been multiple attempts to cross the hurdle in the past week but none of the times Nifty 50 was successful on a closing basis, except for Friday.
On the last day of the week, there has been a buying surge seen across sectors, leading Nifty 50 to not just cross this hurdle but close at the highest level since 5 August 2024. Now, is it time to initiate a long trade or is it a lucrative short opportunity?
Image Description: Daily chart of Nifty 50 (spot)
Image Source: Investing.com
Technically, the structure of the price movement is clearly pointing towards the south direction. There has been a lower low and a lower high formation taking place on the chart which is a classic definition of a downtrend. As long as this structure isn’t changing, bounces can be looked upon as a short-selling opportunity.
The ideal level to fade this bounce is when the index fills the gap made after 5 August 2024, which is at around 24,686. The market has a tendency to fill or close the gap after which a reversal is quite common. The SGX Nifty is indicating that the above-mentioned gap might be filled in today’s session.
If the market surges past its previous high of 25,078, then the bearish view should be reversed and a bullish stance can be taken.
Traders also need to be cautious of the upcoming Jackson Hole Symposium and FOMC minutes this week which might instill some volatility in the US markets, the ripple effect of which can be seen in the indian market.
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