I had mentioned last week that if you are a mean reverting trader in Nifty, you are living in a paradise.
Link to the post - Link
We had monthly F&O expiry on 27th April and there was a sharp jump before that. Since market was not able to generate a follow up on downside then market started to move up and caught everyone with a surprise up move towards he upper end of the range. That is how failure works, failure at one end of the range takes the prices towards the other end of the price range.
In the last post I had shared how Market traded at the range low with ZERO follow-up on sell side and market made a comeback inside the range. The same thing happened at the upper end of the range in the last week. Lets see that on chart below
Market opened with a gap at the key reference of 14984 and did not give any follow-up on upside and started to move down. I will again emphasize on the same point mentioned last week - its very important to focus on the day structure rather than what view you are carrying when going into trade for the day.
We now have failure at both ends of the range, but what to expect next ?
Since we are trading inside a range now, we should be focused around the action at the pullback high and pullback low created inside this range. I have marked them in below chart.
If Market breaks the pullback low of 14450 we are headed lower, since the recent failure was on the upside and If there is a gap up / up move to the pullback highs of 14820, I will be first interested in a sell trade because of the fact that recent action was a failure on upside.
Disclaimer & kindly do your own research before taking any position in any security. I do not have any open positions in Index.