Nifty shrugged off ITC induced Tuesday sell-off in a bullish move on Wednesday, closes above 5 DMA

Nifty (close approx. 9899.60): Nifty opened gap-up today and price moved even higher by closing hours on Wednesday. Price closed above 20 hour and 34 hour moving averages which are presently at approx. 9876.8 and approx. 9881.2 respectively at Wednesday’s close and they should act as support in Thursday’s trading. If hourly candles hold support of 20 and 34 period moving average we may see a new high in Nifty. 50 hour moving average, presently situated at approx. 9865.4 and Tuesday’s low of approx. 9816, are important levels on the downside. On the upside, the Nifty should look for approx. 9928 level (the previous high and close to hourly upper Bollinger level at present) first, and then there is all important round figure level of 10000. Hourly slow stochastic has broken out in overbought zone and hourly CCI and RSI should break out above their respective normal zones if Nifty decides to move higher.

                                 Figure: Nifty hourly chart

Nifty closed above 5 day moving average, which is presently at approx. 9884.15. This level will be crucial for Thursday. Multiple hourly closes above 5 dma may draw bulls and drive prices higher. Given the fact, that ITC induced Tuesday correction was one-off and market made up almost all of the Tuesday’s loss in Wednesday’s trading, Nifty looks bullish in daily time frame. On the down side 8 dma stands at approx. 9849 and 13 dma stands at 9769.2.

In spite of Tuesday’s fall, the daily slow stochastic did not move into normal zone from overbought zone and it is emboldened after Wednesday’s move. The daily CCI is already in overbought zone and daily RSI is on the verge of moving back into overbought zone. All these signals, combined with price action gives bullish possibility for Nifty.

                                Figure: Nifty daily chart

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