Bulls repeat the Bear act

Today Bulls made a grand comeback and did exactly what bears did yesterday i.e. kept on hammering the other side as if there is no tomorrow.

Was the bounce unexpected? Not really. But that’s about it. Oversold bounces are always difficult to time as they are very sharp; and rarely give an entry opportunity.

Nifty intra-day Chart

With today’s bounce, Nifty has practically recovered the complete loss that happened yesterday.

1. Nifty started the day with big bang gap-up opening, compared to yesterday’s close.
2. But then yesterday’s nervousness crept in and pulled the market down to 4580 in the morning for brief period of time. That’s about it.
3. Bulls then took the market in their control and there was practically one way ride in the market from 4580 all the way to 4620 without any meaningful pullback.
4. Technically, Nifty has created a support at 4680 atleast for near term

Nifty finally closed the day with 3.2% gains. Nifty spot recorded high of 4718 and low of 4565.

Nifty 5-day Chart

The 5 day chart clearly illustrates - extent of recovery and potential. Now, as long as Nifty is above 4680 - it can aim for 4850. But considering, the one way ride - Nifty had - any meaningful correction can bring in panic and nervousness. So, we are still in shaky UP and down market.

Nifty Daily Chart

On daily chart, Nifty has printed a strong reversal on the chart. Considering how oversold the market is, there is probability that Nifty may continue with bounce to 4850. Global cues might help.

Where do we go from here?

It depends how we want to interpret this rally.

Scenario 1- If what we are witnessing is just an oversold bounce, then this rally can extend to 4850 to clean up the shorts, but then around 4800 - fall can be equally sharp.

Scenario 2: Nifty consolidates and absorbs selling between 4600 and 4750 - builds a base and then moves upward - then only, the next leg of rally can be more sustainable one.

We are right now in Yo-Yo kind of market and such markets can make you nuts as they can wildly move from one end to another effortlessly