We argued [ please refer earlier posts ] that soon Nifty would resume its uptrend once the short term overbought condition is released. We also spoke about this down trendline which Nifty future breached successfully recently. To make this uptrend more healthy , a successful re-test was desirable, though not necessary. Both the events coincided today - i.e overbought condition was released to a great extent and Nifty future successfully re-tested and bounced from the said trendline ( please see the chart above ). We also argued earlier that resumption of the uptrend was just a matter of time. And this upmove will have primarily two targets -taking out the recent high of 6120 made in 29th Jan'13 and then move on to take out the all time high levels.
Today's move is a first step towards this goal. Bears are trapped badly and its going to hurt in coming days. And for bulls - today's low become a important reference point of support, below which the story changes.
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