Nifty has given a phenomenal rally from the lows of 5500 to 6000 levels and in the process it has broken past the important resistance levels of 5840 & 5970 mentioned previously.

Lets take a look at the Nifty chart closely.
As can be seen from the chart, Nifty broke past the previous trendline resistance@ 5840 (marked in RED) and has now reached another important trendline resistance@6030. Nifty is moving in a broad channel & having touched the channel bottom @ 5500, it is now moving towards the channel top @ 6250. Nifty however faces overhead trendline resistance at 6030, 6080.

There are 2 scenarios in place now.

Scenario 1 : The upmove from 5500 is impulsive and is the 5th and the last leg up. In such a scenario the logical target for Nifty comes at 6250 i.e. the channel top.

Scenario 2 : The rally from 5500 is corrective and may top out near the resistance levels of  6030, 6080 (RED ARROW) and resume its downward journey from there.

Now what can give us a clue as to which scenario is in play???
The 2 short term trend deciding levels are 5930 & 6030. If Nifty manages to breakout and sustain above 6030 then probability of scenario 1 will increase whereas if Nifty manages to break and sustain below 5930 then probability of scenario 2 will increase.

Nifty's movement post RBI POLICY tommorow will give us further clue to the direction and underlying nature of this rally.

It is interesting to note that the upmove and breakout from the resistance band of 5970 today was followed by a spike up in the VIX levels which has been increasing from the past 3 days & has now closed above its 200dma @15.80. This further puts a question mark on the validity of this breakout and any weakness shown by Nifty near the resistance level of 6030 coupled with a breakdown below the 5970 levels can be used as a good shorting opportunity.

Till then play as per levels.