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Nifty

Nifty closed below its 5-day moving average support line forming a ‘Spinning Top’ formation on its daily scale. After the amazing surge, the "Engulfing Bearish" candlestick pattern that formed on its daily price scale followed by ‘Spinning Top’ formation is the first sign of weakening momentum awaiting confirmation. With the RSI displaying a breakdown and the ADX continuing to trend higher at 31, both of its trend strength indicators are diverging & display lack of conviction. Given that the weekly candlestick formation shows a "Shooting Star" pattern ahead of the huge event (Union Budget 2024), the week's immediate support is situated near its 20 DEMA level of 24205, which could be in jeopardy." Hence, we advise caution at higher levels due to potential reverse trends and potential risks in breakout trades. We also advice to refrain from buying on dips as the index ended below its rising 5-day moving average, also avoid leveraged longs until event volatility subsides. Due to the proximity towards the extended target zone of the continuation pattern, 24965, the index may not offer healthy risk-reward prospects for confident longs.

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