NIFTY Technical Outlook This Week: Wait For Next 3-5 Weeks Before Making Major Decision

As predicted previously, the NIFTY made a sharp rebound after hitting the 10,000-support level 3 weeks back. However, the one-directional upward move over the past three weeks has been a pleasant surprise, after almost 8 painful preceding weeks.

The index now faces a strong test - one that will likely determine its broad direction over the next 12-15 months. The bullish trend that began way back at the end of 2016 was decisively broken in February, when the index dipped below the middle-Bollinger band on the weekly charts, and further confirmed this by heading all the way to the lower band.

There are three distinct possibilities now, and one of them will get confirmed over the next 3-5 weeks. If the index tears past the current level and breaches the 11,000 mark decisively, we can rule out the possibility that we've entered a sustained bearish phase. In that case, we may be in for a more range bound market, as near time drivers of superlative market performance are more of less absent.

The worry would be if the bears take control as these levels (~10,400) and push the index below it's previous low of 10,000 over the next 3-5 weeks. If that does happen, we'll have received a fairly decisive confirmation of the unhappy commencement of a sustained (12-15 month) bearish phase that could see the markets correcting even 25% or more from current levels.

Either way, the next 3-5 weeks will hold the answers. Right now, it continues to be a wait and watch game, with caution advised.