Im­me­di­ate Trend Pos­i­tive, but Mo­men­tum is Slow­ing Down

The Economic Times - - Companies: Pursuit Of Profit - Chandan Ta­paria Ashu Ba­gri

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?

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