Nifty50 & Nifty500 Hits Critical Demand Zone: Ready for Bounce?

Indian stock market has been in a downward for over a month, Let’s dive into the technical setups and explore potential scenarios.

🔥 Demand Zone Insight: Drop-Base-Rally (DBR) at Play
On Friday, Nifty 50 entered a demand zone, specifically a Drop-Base-Rally (DBR) zone — an area often indicating unfilled orders from institutional buyers. In strong markets, simply entering the zone could signal a buying opportunity. However, since the broader trend has been downward, it’s more prudent to look for confirmation.

Today, Nifty 50 delivered that confirmation entry by forming a bullish candle within this demand zone, suggesting that the price may now have the support it needs to reverse direction. This type of entry confirms that buyers are stepping in, providing traders a more reliable basis to consider potential setups.

📊 Nifty 500: Inside Bar as Additional Confirmation
For traders who prefer further confirmation, the Nifty 500 presents an interesting setup. After hitting a key support level last Friday, the index printed a bearish candle (-1.27%) followed by a small, 0.67% bullish candle today — a formation known as an inside bar.

🛠️ Trading the Inside Bar: Breakout Signals
An inside bar indicates price consolidation and often precedes a breakout. By waiting for this breakout, traders can add another layer of confirmation before entering.

Bullish Breakout: A price rise above today’s high could signal a potential reversal and strengthen bullish momentum.
Bearish Continuation: If the price falls below today’s low, we may see the downtrend continue.

⚠️ Final Thoughts 📉
Nifty 50’s demand zone and today’s bullish candle hint at an early sign of a potential reversal. However, with the daily trend still pointing downward, a more cautious approach may be wise. Waiting for additional confirmation through an inside bar breakout in Nifty 500 could provide stronger validation. If tomorrow Nifty 500 breaks above today’s high, this would confirm the inside bar breakout, offering a clearer reversal signal and a green light to plan buy entries in selected stocks based on your setups. Conversely, if Nifty 500 breaks below today’s low, it may indicate a continuation of the downtrend.

Lastly, Thank you for your support, your likes & comments.
"Successful trading is the art of waiting for the perfect moment." 📈

This analysis is purely for educational purposes and is not intended as a trading or investment recommendation. Please note, I am not a SEBI-registered analyst.