The Nifty50 index extended losses for the third day to close a percent down yesterday, on caution ahead of the Reserve Bank of India’s monetary policy committee meeting outcome. As per our live trade set-up shared yesterday, Index made a dot reversal from ABCD PRZ level (16,346) but lacked momentum and traded in a range throughout the day thereafter. Even though the index reversed, only an option seller would have made money. That is why it’s important to choose the right segment.
Intraday On a close-to-close basis, Index once again defended its strong support at 16,400/450 levels. The index has stopped making lower lows and broke the downward trendline resistance, activating the XABCD pattern with a potential target of 16,580 (if 16500 is broken and sustained). We will consider a short position only if the index sustains below 16,350 levels with a target of 16,270 (ABCD pattern on hourly TF). The index can also retest 16,000/50 levels if the negative sentiment continues.
Volatility is likely to persist and a clear direction may only emerge after the RBI policy outcome.