Nifty needs to close above the 18,450 to avoid bearish plunge

The equity market sharply moved higher by 1.28 per cent and closed above the 18,100 level. The IT pack has led the Market's rally on Friday. Barring the Media and PSU Bank sectors, all the other sectoral indices ended with decent gains. The IT index was up by 2.10 per cent. The Realty index up by 1.65 per cent and the Infra index advanced by 1.09 per cent. The other indices advanced by 0.40 per cent to one per cent. The VIX is down by 6.94 per cent. The market breadth is negative as 2,054 declines and 943 advances. About 109 stocks hit a new 52 week high and 113 stocks traded in the upper circuit.

The Market bounced sharply and closed at the prior swing high. With this bounce, the Nifty has erased all the weakness and negated yesterday's bearish flag breakdown. Three day's of decline is just a micro trend with the intermediate uptrend. A close above 18,123 will result in the resumption of an uptrend. Now the 50 DMA (17,795) is key support for the Market. After 10 days, the Nifty closed above the 20 DMA. The RSI has also moved above the prior swing high and above the 55 zone. This price action shows that the bulls are coming back with renewed strength. On 75 minutes chart also moved above the moving average ribbon and the MACD line above the zero line. With today's move, the weekly candle escaped the bearish formation. In fact, it also escaped from a bearish formation by closing above the previous week's high after taking support at 10 weekly averages. The Only concern is that the last weeks of price action are limited to the previous big bearish candle. To avoid this inside bar price action, the index needs to close above the 18,450 or below the 17,784. Next week these levels will be crucial for the direction. Stay positively cautious for next week.