We have been tracking two trend lines for quite a few days now in hope of finding an important confirmation signal. The T1 line has reinforced its importance time and again with markets refusing to stay below this line for long. The market rally for two days meant that yesterday markets closed over T1 and right near another important trend line T2. This also happened to be close to the level of 7241, a level from which markets fell to a new low during the budget presentation. We had mentioned in one of our previous posts how Nifty should be able to break this level in case it tests it again. We also reinforced in the last post that it is very important that markets do not reverse again from this level.
Today’s opening has potential to be what is known as Breakout Gap. The prices have not only broken above the line T2, but it also means breaking the important level of 7241. Gap opening also confirms the importance of these levels. This also activates a target of 7900 in the medium term for this pattern. A more intermediate target may become apparent based on the intra day action today and whether the gap closes during the intraday action. But for short to medium term, we anticipate trend to remain up and a smooth 5 -wave development on the upside.