The day started with a gap-up opening, and apart from a brief initial dip, prices maintained a positive bias throughout the session. Nifty eventually ended with gains of around 1.18%, closing tad below the 23700 mark.

Nifty has now bounced for the second consecutive session, and the candlestick structure formed over the past two days resembles a bullish reversal pattern known as a “Morning Star.” While this is a positive development for the bulls, they are still not completely out of the woods considering the sharp sell-off witnessed from the last week. Prices would need to sustain the recent gains and extend further higher for bullish momentum to regain strength convincingly. On the upside, resistance is visible at almost every 100-point interval, primarily due to the presence of recent bearish gaps and key moving averages such as the 20 EMA and 50 EMA. Hence, crossing these hurdles with strong momentum over the coming sessions will be crucial for the recovery to strengthen further. On the downside, today’s low around 23400 is seen as immediate support, followed by Wednesday’s low near 23250, which remains a crucial support zone as it coincides with the base of the Morning Star formation as well as the 50% retracement of the entire April rally. At present, the benchmark index remains in a corridor of uncertainty, and the next directional breakout is likely to determine the next leg of trend. Until then, individual counters continue to display relative strength, and stock-specific opportunities are likely to outperform. Traders are therefore advised to focus on selective stock-specific setups.

Rajesh Bhosale, Technical Analyst, Angel One