Nifty gets ready for the second step & Silver – Cup+Handle is bullish

The Nifty found support at 4800 and bounced off these levels. The move from 4800 to 4950 was relatively easy. Remember that the Index had been following for many days, was quite clearly oversold. While oversold could contiue falling, the Index stopped falling when it touched 4800 and this was a sign that a countertrend rally was starting.

The move from 4800 to 4950 was easy. After all, the first bounce from oversold levels should come with a lot of comfort to the bulls. Short sellers rush in to cover while bargain hunters are buying. So, the market rallies quickly.

Now, we are probably entering the second step – when buyers will have to step in to keep upside momentum. This will be more difficult that the first, initial rally. We think of the next move as the second step in the upswing. If the second step can be taken by the bulls, then a sustained rally may be possible.

Resistance levels for this rally will be 5050 and then 5200.

a writes: “sir dont you see a bullish cup and handle pattern in the u shaped base and the rectangle.even the volume actions have been similar to a bullish cup and handle..dont ya think there s a lot of accumulation taking place…targets please”

Yes, a. The cup and handle pattern in Silver is visible and confirmed due to a breakout from the handle. Traders must know how to trade this breakout. I would wait for a dip / consolidation.