According to O’Neil Methodology, while the index is in a Downtrend, the first day on which the index closes positive, regardless of the low, is considered as ‘Day 1.’ Regardless of whether the index closes positive or negative, if the correction low is not broken on Day 2 and Day 3, the market status is changed from a ‘Downtrend’ to a ‘Rally Attempt.’
From here, we would prefer to see a follow-through day before shifting the market to a Confirmed Uptrend. A follow-through day is a solid up session, generally a 1.5% or higher gain, with volume being higher than the previous day. Should this occur, the focus will be on ideas breaking out of early-stage base patterns and showing the best relative strength with good accumulation.
On the flip side, Nifty is still below its 50-DMA and about 6% off-high. So, if it breaches its recent low of 14,151, the market will be moved back to a Downtrend.