As the Nifty traverses higher highs, it is adding more bullish strength, but volumes take a slower pace. Daily charts have been in the long trade since 6 sessions now with a gain of about 110 points. This long trade came with a strong reversal from a prevailing bear trend and is yet to open itself into a new bullish trendiness. Unless a new trend opens out, there is a likely chance of the index going into a range. In such a scenario can we define the range to be followed in the due course? Yes it is possible, as of today's chart is at 5150-5020. 5150 though was closely achieved in the previous session, now the next stop can be at 5020. To support this perception we can take a look at the next lower time frame for confirmation.
On the hourly charts, there is a very clear bearish divergence on all the indicators, but one issue of concern here is that the bulls are not giving way for the bears to take control. With few more hours of holding in the bullish range, this index will have its main indicators go into a flat range. Then we need a break out and formation of a pattern to take new trade direction. As the market unfolds its directions, let's wait in patience for the next best opportunity to a high probability winning trade.
As tightness sets in the market, many stocks that are in their long trades have given new stop losses, hence, covering the risk on their trades. Getting exit from a stock that is not going in our direction saves us precious capital and gives an opportunity to look for a better trade if we have one.
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