Nifty has been in consolidation since UP election results on 14th March which is almost a month now. We have been consolidating strictly between 9000-9250 but with strong stock specific movement. On the other side Nifty Bank has been out performing by holding 21500 level since quite a long time.
Looking at Nifty daily chart , as attached, today we have closed with almost a Doji which signals pause to current trend which was a down trend. Now if at all we open a point positive and trade above todays high than we may get somewhat like a morning star pattern which is a positive reversal pattern. Though on negative side we have more factors such as todays close below 20 day average first time after 6th jan and overbought indicators. But what makes me strong for a short rally in near future is strong breakout of market leader Reliance and strong option support at 9000 by PUT writers. Also if we consider Wave count theory, then probably we have given a close to wave 4th today by completing Wave C of A-B-C zigzag formation in 4th Wave. So as of now there are equal forces of Bulls and Bears on Daily chart and only tomorrow move could decide market sentiments ahead. But would still recommend to remain long ton stock specific .
Strategy for traders: ” Avoid Nifty trade specifically, but buy Reliance 1400 CE and buy 9000 PE Nifty.” …tgt 1480 on reliance…!