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Nifty

The Nifty had a solid follow-through session yesterday, closing near 24,500 and regaining support above the 24,160, largely due to short covering but the index failed to overcome its 20 DEMA level of 24550. The "Piercing Line" pattern appears to have been confirmed by yesterday's closing and indicates a likely established base at 23800. This move indicated a potential attempt at reversal from this point and appears to be a new upward rally towards 25340, which is the current declining wave's 61.8% retracement zone. To create a new bullish impulse wave that may eventually assist the index in scaling above 25750 in the upcoming weeks, an immediate closing above 24,600 would be ideal. Options data currently suggests a change in the trading range to 24300 to 24700 for today with a crucial hurdle at 24500, after the formation of a strong support base around 24000. Additionally, the highest ceiling for the month has moved from 24500 to 25000–25200 instantly. The selling pressure has subsided as the India VIX has cooled off from 19 to 15, indicating that a robust short-covering action may persist through out November. However, a positive turnaround requires a clear weekly closing over 24,460. The 24,300 and the 24,000 supports should be actively watched by traders. Stick to a long-short strategy until the index signals a more steady and potential reversal, and only increase long commitments following a trend reversal confirmation above 24600.

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