Nifty broke down from a consolidating range but finding support at lower level

On 5th June, Nifty concluded the week in a consolidation phase with a bearish inclination. Although the day began with optimism, selling pressure emerged at the 23500 level, ultimately bringing Nifty down to close at 23366 by the end of the session. The MHAF chart supported this perspective, showing a red candle with an upper wick, albeit not very strong. However, on 8th June, this view was reinforced with a gap down opening in Nifty by 290 points. Interestingly, this significant bearish pressure began to dissipate from the start, and at the time of writing, Nifty is steadily rising from the opening level. Currently, Nifty is down only 140 points for the day, indicating a recovery of 150 points from the opening gap down level. This still does not confirm a strong bullish move, as the MHAF chart is still in the process of forming a strong bearish candle.

According to the spreadsheet below, the existing bearish trend will end if Nifty hits 23575 today or approaches 23400 tomorrow. Should this occur tomorrow, a new bullish signal will emerge above 23506.

Our short position remains intact, yielding moderate gains daily. We will only switch to a bullish stance if Nifty hits 24005 in this monthly series, which currently has just a 20% chance. At present, we have an unrealized profit of Rs 72,000. If Nifty consolidates at this lower level for another 1-2 weeks, we will reach our 80% profit target by then.

Cheers and happy trading.