The Nifty started last Monday’s session on an optimistic note. However, we saw selling pressure around 8200–8220 and as a result, the Nifty tested sub-8200 level on the same day.
In fact, the similar price action was repeated for the next couple of sessions as the index opened higher and then corrected slightly from morning’s high. However, on Thursday, the bulls came back strongly to surpass the resistance of 8200–8220 with an upside gap. This momentum accelerated the day’s progress by retesting the recent swing high of 8274.95. This was followed by a mildly negative session concluding the week with a gain of 0.71 percent.
It’s been a week of consolidation for the market after seeing a spectacular recovery in the previous week posting a new ten-month low of 7893.80. However, things were quite clear due to this remarkable rally that the Nifty has formed a base around 7900 and is now poised for a breakout beyond 8274.95.
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“Very much on our expected lines, the Nifty first retested the mentioned level and then kissed the 8300 mark. However, we saw some profit booking on Friday, which we believe was quite evident after a straight 400 points upward move and importantly after testing the daily ’89 EMA’ placed around 8295,” said an Angel Broking research report.
Now, “we would interpret this corrective move as a breather and continue to expect higher levels of 8400–8460 in the near term. Some of the key evidences for such hypothesis are a rising ‘RSI-Smoothened’ on daily chart after confirming a ‘1-2-3’ pattern, positive crossover of ‘5 & 20 EMA’ combination, and a ‘Double Bottom’ formation precisely at 50% Fibonacci retracement level of the entire rally from 6825.80 to 8968.70,” it said.
Thus, traders are advised to stay positive and use all meaningful dips to initiate fresh long positions in the market. Going ahead, 8182-8133 would be seen as an important and strong support level.