Nifty Technical Analysis: Outlook and Trend for 16th Sep 2020

Medium Term Trend:  ↑UP (Changes to down below 11275)

Nifty Above 11500:  Yesterday, Nifty opened with a gap up but couldn't sustain it and dropped towards 11400 levels, today market has again made an attempt to move above 11500 and now the question is if its just a retracement and if Nifty is likely to open another leg on the downside soon?  Lets discuss.

Yesterday, when Nifty opened with a gapup, it was an excellent bullish move ( island reversal pattern) and it countered the gap down we had seen earlier on 4th Sep (when markets had opened with a gap down of 150+ points below 11400 levels from 11525 levels). Now if the gap-up had held yesterday, it would have created a base for an instant strong rally towards higher levels however it wasn't to be and Nifty closed the gap by end of the day. But inspite of that the bullish options are still open but now can different route meaning now Nifty can go in for some sort of consolidation before it start moving up and thrust on the upside may or may not be that strong.

Its entirely possible that we have completed the consolidation today or it can go on for couple of more trading sessions. Once this consolidation completes, we can see a fresh rally in Nifty.

Yesterday we saw a sharp pullback towards 11400 but today markets haven't given any followup selling below it, which probably means that it was just a corrective move on the downside (part of consolidation). Impulsive move when starts usually see a followup buying/selling the next day ( which was missing from today)

Now in case market fails to move above 11575-600 levels tomorrow and drops below 11500 again then it could mean that consolidation is still ongoing and we can retest 11400 levels ( or even slightly lower) however no serious threat or chances of bearish move till the time 11275 is broken decisively. This level has proved its mettle last week and now is one important pivotal level.

So in nutshell, a move above 11575-11600 levels could mean that consolidation is over and Nifty is ready to test higher levels however a drop below 11500 level could indicate that the consolidation is still in progress and we might spend little more time around 11400 levels before we start moving up. On the other hand, for any strong bearish options to open, we need a strong push below 11275 levels.

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