Nifty future has fallen below its 200 days SMA recently and now hovering near the same. Today nifty futures has settled at 8238.70 on NSE forming a bullish pin bar. Follow up selling is not coming even though prices have fallen below 200 days SMA. 50 days SMA is still staying above 200 days SMA and keeping longer term bullish trend intact. On daily chart a Wolfe Wave pattern is clearly visible which has completed at point (5). Completion of WW brings trend reversal. Stochastic is fluctuating near 50 and forming lower top along with prices hints sideways activities.
On hourly chart a bullish Wolfe wave and inverse head and shoulder patterns can be seen clearly. Market has witnessed a nice recovery from point (5) of bullish WW which is also forming head of inverse head and shoulder reversal pattern. Now we need a neckline breakout on hourly chart to validate this inverse head and shoulder pattern. On hourly chart stochastic is staying above 50 line and also loaded with positive momentum.
According to daily and hourly charts Nifty Futures has strong supports at 8140 and 8020. Any failure of 8140 will slow down momentum and then it will turn sideways and again bears will become dominant. Areas of 8000 will remain key psychological support and 2 or closes below this level will hint resumption to on going down trend and will put focus on 7700-7500 zones. Any sustained move above 8280 in next session will attract fresh bulls and then it will put focus on 8350 which is also resisted by 200 days SMA and neckline. Areas of 8340-50 will remain important to watch and 2 or more closes above that level will call for a rally towards 8500-50
Based on the charts and explanations above traders can look for long entry around 8240-8220 by keeping a closing basis stop loss of 8130 for targeting 8500-8550 in short term.
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