Last week, it was stated that, “Nifty50 has reclimbed the ceiling of the falling wedge which indicates a slower falling rate with a bullish view again. An Inv H&S was under development but failed to form. A ‘Broadening’ formation has been spotted with a positive divergence on the charts. The above formations have helped the Nifty index to reach near its resistance at 22923.9. So, further rally should be expected only above a close of 23000. The downside supports are seen at 22600/22400/22250. If Nifty50 manages to close above 23000 then it may try to touch 23400 mark. Situation may go in hands of bears, if it fails to protect 22600 on downside, as a close below will mean we are again inside the wedge. Bullish views should be welcomed above the falling wedge but this time watch the mark of 23000 closely and be bullish only above it, as whipsaws have become common in such an event and it can be a fake breakout, so for further confirmation Nifty50 has to give 2 consecutive close above 23300.”
About the trading range, it was mentioned that, “Upside can be expected above 23000. Bears can short the index near 23000 with a stop of 23400 while bulls should try to go long near the dips of 22400 with stop of 22000. Remember the breakout point of the upside ‘broadening’ pattern is 23900 and the downside is 21200. So, any close up or below will decide the further facets of the market. Till then buy on dips and sell on rise will be the strategy. Bulls will try hard to protect the mark of 22600 which is the breakout point of the falling wedge and bears may hit it hard to knock back below this level. Henceforth 22600 and 23000 are the most crucial points which decides the further play. For bears the risk will be closing above 23000, while for Bulls the risk will be closing below 22600. Note: The upside point of the ‘broadening’ pattern is 23900 while the downside is 21200. Any breach of these points will decide the further move.”
Now, the view for this week can be summarized as, FIIs were net buyers in cash segment for the week worth rs. 17796 crores while DIIs also remained buyers worth 1132 crores in cash segment. Nifty50 after a breakout above the broadening pattern had zoomed till 24365 and thereafter it revisited the breakout point till 23800 forming a low of 23847.85 and managed to close near 24000 at 23992. Nifty50 after the breakout still seems bullish. The terror attacks has created geo-political tensions but technically we have yet not bisected the breakout point of broadening pattern which is 23800. So till the area of 23800 is not breached one should focus on longs as the upside remains open till 26000. Only upon a breach below 23800, Nifty50 can slip back to 23400/23350 which would be again and opportunity to add longs. The bullish implications can remains intact till Nifty50 doesn’t close below 23300. The upside hurdles remains at 24350/24500, crossover above can take it to 24850/25000.
