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Nifty has been trading in the downward sloping channel since February 16, 2021. Trading in the channel indicates that the market is passing through the consolidation phase. During this phase, the trend remains choppy and directionless.

A lot of whipsaws with fake breakouts take place in the choppy phase. Mean reversion or fading (buy low and sell high) works out better in this kind of scenario.

So, it has been tough to trade large-cap stocks in the last couple of months and that trend still continues.

However, looking at the recent developments on the Nifty charts, it seems that the index is likely to break out from the consolidation soon.

A major reason has been the strong breadth in the market. A strong advance-decline ratio in the consolidating market indicates the chances of an upward trend sooner or later.

Indicators and oscillators like MACD, DMI and RSI have shown some early signs of a breakout in the index.

Daily MACD has reached above the equilibrium line. RSI has been positing higher bottoms and has also shifted its range upward. DMI indicator has turned bullish, as +DI has crossed –DI line on the upside

The formation of the higher bottom at 14,416 in Nifty could be an advanced signal of possible upcoming breakout.