Breakaway then runaway gap signals trend acceleration mid point - Tradebulls Securities Pvt Ltd
Nifty
Gaps typically signal trend phases, not reversals. The sequence of a breakaway gap followed by a runaway gap confirms trend acceleration, with the latter often marking the midpoint of the move. The current gap lacks confirmation of an exhaustion phase, as there is no panic flush candle or climactic volume breakdown. Hence, the market may continue to exhibit further downtrend, with intermittent pullbacks respecting the lower high -lower low formation. While daily indicators are stretched, the rising ADX on the weekly timeframe indicates trend continuation strength. A measured downside extension could emerge towards the 22266 (Retracement support) to 21920 (200 WEMA support) zone, aligning with deeper retracement and long-term support. A durable reversal would require either a strong weekly bullish signal or a gap reclaim above 23850. Macro headwinds like elevated USD/INR, firm crude above $90, persistent FII outflows, and geopolitical tensions continue to cap upside. For now, maintain a sell-on-rise mode, avoid aggressive longs, and trade with limited positions and adequate hedge while participating pullback moves.
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