By Dalal Street Investment Journal (DSIJ)
Nifty Trading Strategy for Tomorrow, March 6: Thursday’s pullback brought the index back into the rectangle pattern, but it still trades below key moving averages. As long as 24,305 holds, the pullback can extend towards the 24,989–25,141 gap zone. On the downside, a slip below 24,570 would weaken the setup and increase the risk of the bounce fading.
After three consecutive sessions of selling pressure, the Nifty 50 halted its slide on Thursday, rising over 1% to settle above 24,750. The index opened with a 135-point gap-up on firm global cues and spent most of the day in a tight 140-point range. Strength came through in the final leg of trade, when the Nifty surged and briefly moved past 24,850. However, it gave up a part of those gains into the close, finishing nearly 100 points below the day’s high.
The move was broad-based, with most sectoral indices participating except Nifty IT. Market breadth improved as the broader market outperformed, with the Nifty Midcap 100 and Nifty Smallcap 100 gaining 1.52% and 1.58%, respectively.
On the daily chart, the session resulted in the formation of a sizable bullish candle with shadows on both sides, marking a higher high and a higher low versus the prior day. Thursday’s pullback has pushed the index back into the rectangle pattern, though it continues to trade below key moving averages. At present, the Nifty is 3.32% below the 50-DMA (in blue) and 2.28% below the 200-DMA (in red), with the gap between the two narrowing. If the 50-DMA closes below the 200-DMA, it would confirm a Death Cross—a bearish technical signal where the short-term moving average (typically the 50-DMA) slips below the long-term moving average (typically the 200-DMA).
Beyond the moving averages, an important near-term observation is the formation of a short-term swing low. The low of March 4 stands below the lows of the candles immediately to its left (March 2) and right (March 5). As long as the index holds above this “panic low,” expectations of a continuation in the pullback remain alive. On the upside, the gap zone from Monday, March 2—between 24,989 and 25,141—forms a crucial resistance area. The 50% Fibonacci retracement of the recent fall from the February 19 high to the March 4 low comes in around 25,095, further reinforcing this band. On the downside, immediate support is seen near 24,570, followed by the more critical support at the March 4 panic low of 24,305.
Overall, the structure still looks fragile. The index may attempt to test the 50% retracement level or fill the early-March downside gap, but only if 24,305 holds. The focus now shifts to the weekly close on Friday. Follow-through buying, along with further cooling in the India VIX, would help restore confidence on the bullish side. However, a weekly close below 24,570 would signal a breakdown from the rectangle pattern—and Thursday’s rebound would risk being labelled a dead cat bounce.
SEBI Registered Research Analyst (INH000006396).
Founded in 1986, Dalal Street Investment Journal (DSIJ) brings decades of experience in India’s equity markets. DSIJ's research combines fundamental analysis with price action, guided by disciplined risk management and capital preservation. They follow a structured, data-driven approach designed to help investors and traders make informed decisions beyond short-term market noise.
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