After showing upmove with high volatility on Tuesday, Nifty showed a sustainable follow-through upmove on Wednesday and closed the day higher by 184 points. After opening with an upside gap of 95 points, the market shifted into a gradual upmove for the better part of the session. The upside momentum got strengthened in the afternoon to later part of the session and Nifty finally closed near the highs. The opening upside gap remains unfilled.
A reasonable long bull candle was formed on the daily chart with gap up opening (back to back second opening upside gap which remains unfilled). This pattern indicate a continuation of pullback rally in the market post sharp decline. The Nifty is currently placed at the crucial overhead resistance of 17000-17200 levels and the negative chart pattern of lower highs and lower lows remains intact. Present upmove is in line with the formation of lower top of the pattern. But, there is no confirmation of any lower top reversal yet at the highs.
The negative chart pattern is still intact in Nifty as per smaller to larger timeframe charts. After breaking below the important weekly lower support of ascending trend line at 16700 levels in the early part of this week, the market has bounced back from the lows and regained the lost support area as of now. Hence, further weakness below 16700 could mean emergence of next round of weakness in the market.
Conclusion: The pullback rally continued in the market and the Nifty is now entering a crucial overhead resistance of around 17000-17200 levels. There is a higher chances that Nifty could reverse down from near this area in the next few sessions. Immediate support is placed at 16830 levels.