Immediate Trend Positive, but Momentum is Slowing Down
Nifty consolidated in a trading range in the last week as follow-up buying was missing at higher levels. Immediate trend is still intact to positive but momentum is now getting slow and index is trading at overbought territory so a hold below support may attract a profit booking decline which may hurt sentiment to drag the index towards next meaningful support of 7777-7720 zones. While if it manages to surpasses crucial hurdle of 7979 then only fresh up-move may start with short covering to extend the recent rally towards 8080, then 8200 zones.
Traders are required to follow trailing stop losses as index has rallied and now it requires a price or time correction for next momentum. Bank Nifty is at make or breaks level which is near to its falling supply trend. It has support near to 16250 while hurdles at 16800 then 17100 levels. Nifty is finding support while Bank Nifty is finding hurdle at their respective 200-DMAs. Selective banks have given a positive price action and may continue to extend if broader indices support; while cement, metal and infra stocks are now finding supply pressure at higher levels after the recent rally.
‘Doji’ at the upper end of the weekly channel signifies a ‘No Man’s Land’ situation near 8000. Post the ‘Run Away Gap’ on the immediate scale, the Nifty is yet to witness any signs of exhaustion as it consolidated throughout the week in a narrow range. Momentum indicator has not yet registered an overbought situation & hence odds of a breakout above 8000 remain high. A sustained breach above 8000 could reinstate momentum & push it towards 8300. Only a breach below ‘Run Away Gap’ would stall the ongoing bullish trend.
What Could You Do?
in Nifty with stop placed at 7740. Banks, auto and cyclicals are expected to continue their outperformance while pharma to deteriorate further. with a stop 2410 for an intermediate target up to 3100. While ‘Dark Cloud Cover’ on the daily scale of provides an
with a stop loss at 1110 and a short-term target of up to 980.
The Nifty future is facing resistance from the downwards sloping price channel on weekly time frame. Facing resistance at all-time high in early March 2015 and resistance in mid-August 2015 provided the point to confirm the position of this downwards sloping resistance trend line. On the lower side, Nifty has taken support of early May 2015 and lower support of early September 2015 provided the point to confirm the position of this downwards sloping support trend line. The break out on the upside resistance line signals continuation of the trend to the upper side. The Nifty future may find support around 38.20% Fibonacci Retracement level and resistance around 50% Retracement level (From the all-time high of 9191 made on early March 2015 to the swing low of 6833.65 made on late February 2016). The week ahead: The Nifty future may find support around 7752 and 7905 on the upside (7752 is the swing low made during the week ended for 17-10-2014 and 7905 is the 38.20% price extension drawn from low of 2228 to high of 6336).
What is in Store?