The recent action in Nifty has created a deceptive sense of stability. On 3rd July, the market printed an inside bar, with the entire day’s range contained within the previous session. While the Point of Control (POC) on 3rd July did establish itself above the 2nd July rally high, this alone does not constitute acceptance in auction market terms.
Acceptance requires the market to spend both time and volume building value at new levels, indicating that higher timeframe participants are comfortable transacting there. An inside day, even with a higher POC, is more a sign of pause or balance — not commitment. It simply reflects a temporary equilibrium where neither buyers nor sellers were willing to aggressively extend the range.
The G2 High Formation and Emotional Selling
Adding to this cautious interpretation is the development of a G2 high — a structure that often signals potential short-term exhaustion. Over the last two sessions, Nifty has also seen emotional, fast-tempo selling taking place below the value area. This activity is typically driven by short-term momentum sellers rather than longer-term participants.
Such selling often lacks staying power. Momentum participants are quick to exit if the auction fails to attract new sellers. This sets up the potential for short-covering or reversal moves, especially if the selling cannot establish value lower.
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The Strategy Remains: Buy on Dips, Watch for Value Shift
Given the current context, the preferred approach continues to be buying on dips, but with vigilance. The higher timeframe trend structure remains supportive, and unless we see sustained acceptance and value building below the recent ranges, deeper weakness is unlikely to develop.
Key is to monitor for a shift from negative to positive sentiment, which would be confirmed if we start to see:
- Value areas beginning to build higher over successive sessions.
- POC migrating upwards, indicating buyers are comfortably operating at higher prices.
- Previous attempts to auction lower failing quickly, trapping the emotional sellers who were active below value.
Looking Ahead: 26000 and All-Time Highs in Focus
If the market transitions to acceptance above the 2nd July rally zone, with clear evidence of higher value areas and sustained activity, the path toward the next major objectives around 26000 and fresh all-time highs in this July series remains open.
What Traders Should Watch
- Failed breakdowns that snap back into previous ranges, signaling lack of committed sellers.
- Value building higher — multiple TPOs consolidating above former resistance is a strong signal.
- Whether the market continues to attract new buying interest on shallow pullbacks.
Conclusion
The inside day on 3rd July, despite a higher POC, does not reflect genuine acceptance above the prior rally high. Coupled with a G2 high and emotional selling evident over the last two days, the market appears primed to trap momentum sellers. As long as the broader structure stays intact, the strategy remains to buy on dips while closely monitoring for signs of evolving acceptance. Should value begin to establish higher, it could pave the way for a swift move toward 26000 and All time high in this series.
