After showing a massive upside breakout of the range at 15960 levels on Tuesday, Nifty shifted into a follow through upmove on Wednesday and closed the day higher by 128 points. After opening on an upside gap of 65 points, Nifty shifted into a further upmove in the early-mid part of the session. A new all time high was registered at 16290 levels and later shifted into a range movement with minor profit booking from the highs.
A reasonable positive candle was formed on the daily chart with minor upper shadow, which indicate a follow-through upmove in the market. This pattern confirms a valid upside breakout of the range of Tuesday. However, having moved up sharply in the last couple of session, minor profit booking from the high can't be ruled out.
The upside gap of the last two sessions is still intact and the formation of minor upper shadow in Wednesday's bull candle signal chances of minor profit booking from the highs. Though Nifty made a new all time highs, the overall market breadth was negative on Wednesday and broad market indices like mid cap and small cap of NSE exchange have slipped into decline by 1.19% and 1.09% respectively.
Nifty as per long term charts is strongly up and a sharp upside breakout as per weekly timeframe chart is visible. Hence, any profit booking from the highs could be a buy on dips opportunity.
Conclusion: The short term trend of Nifty continues to be up and the sharp upside breakout has been confirmed. Having moved up sharply in last 2 sessions and a weak market breadth is likely to pull the market into profit booking from the highs in the next 1-2 sessions. Any dips down to 16K mark is going to be a buy on dips opportunity. Our initial upside target of 16300 has almost been reached (made a high of 16290 on Wednesday). The next upside levels to be watched around 16500 in next one week.