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Nifty Technical analysis – Is it a breakout or not?

Through week Nifty traded in a cautious mood due to dismal global cues and depended market sentiment. Price action broke the 8300 level although in a negative bias. Trading witnessed range bound movement as investors stayed put from making fresh positions. An actual question facing the speculator is to decide whether it’s a breakout at 8300. Mid cap stocks continued to stay under buyers radar as BSE mid-cap index up 0.1% during the last trading day of the week.

Daily chart of Nifty for Price action trading with observations

An actual question facing Nifty traders is to decide whether it’s a breakout at 8300.

1. From context, Nifty is already trading in range bound structure between 8000-8350. Global economic conditions and Central bank stances are the main shakers of Investors sentiment. The south-west monsoon was 35% above average during the week. Price action reflected these conditions.

2. Through out the structure, Bullish candles are quite larger than bearish candles on statistical average. This information tells us that buying pressure is dominating the market structure. Stability from domestic fundamentals are paying better risk return in Medium term

3. Price action rejected sharply after testing the key level 8000. Resulted pattern contained large lower shadow with a bullish close. It indicates the willingness of buyers to defend the support level.

4. Small candlesticks with consecutive price gaps are very rare formations. Price action traders refer this anomaly as “Exhaustion”. Through exhaustion pattern Nifty eventually broke the resistance level at 8300.

5. Now the actual question facing the traders is to determine whether breakout at 8300 is valid. To asses the validity of the breakout we need to observe the resulting price action for coming week. Next week’s market open can give substantial clues. The prices should stay above the 8150 level in order for bulls to gain confidence or else it’s hard to influence the market sentiment.

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About the Author:

Balaji is a Speculator, Investor and Trader (All in All!!!) and self published author. Trading in the Markets since decade, have seen more ups and downs along with institutional trader's lifestyle. He usually trades Nifty, Bank Nifty, Commodities, Futures cum Options around both Indian and global Markets. Balaji applies highly analytical and systematic Price Action strategies He blogs passionately about Trading strategies, Price Action Trading, Technical analysis, Macro events, Market setups, Financial and Economical topics. Apart from Trading and Blogging, Balaji also mentors aspiring Traders and Investors on becoming successful in highly competitive financial Markets.

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