Nifty maintains the bullish momentum despite a Gap down opening post disappointment from S&P ratings which left the ratings unchanged. A bullish Engulfing pattern is also observed on daily charts as well. A bullish engulfing pattern is formed in a downtrend or day which inculcates a gap down open from the previous close. Prices sustain the lower levels and close higher than the previous day close and cover the trading range of previous day as well, entirely. It is a positive indication for bulls as they may further stretch the momentum.
Overall price structure in the last couple of days clearly shows bulls defending the lower levels specifically its 20 Day’s MA which is placed at 10320 levels. The close has been higher for as compared to previous day. The previous day high has been breached for 7 consecutive sessions and close is higher clearly indicates the stronghold of bulls at lower levels. The same momentum has been maintained despite a gap down.
Derivatives data from the last couple of days are signaling a shift in the range which may occur before expiry and we may see momentum picking up. Previously we have seen writing actively at 10200 – 10100 strikes which is now shifted to 10200 and 10300. This also validates our point of short-term support or base at 10300. A breach of this level will change the trend in short-term while on higher side writers are active at 10500 – 10600.
Nifty needs to take off 10400 which was attempted today. On the higher side, we see next resistance at 10490 – 10530. These levels have a confluence of resistance. In short term we expect the trend to remain intact and favor the buyers while bears may see further squeeze and trap as momentum continues. We suggest buying on dips with targets of 10480 – 10500.
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