That said, certain indicators suggest that the index is in the overbought zone and the bulls are likely to face stiff resistance ahead, said analysts.
The momentum readings on the lower time frame chart have reached the overbought zone and, the 50 percent retracement resistance on the daily chart is seen around 16,650, said Ruchit Jain of
5paisa.com.
“The index is near the resistance and the momentum readings are overbought, but the market breadth is positive and stocks are witnessing buying interest. Generally in such conditions, the market either witnesses a small price-wise correction and later resumes momentum or it trades sideways for a few trading sessions, which we call a time-wise correction. It would be crucial to see how prices behave in the next couple of sessions,” Jain said.
The analyst said that traders can avoid aggressive positions and look to book profits.
Nifty50 managed to sustain above the crucial hurdle of the 200-day EMA around 16,520 level according to Nagaraj Shetti of
Securities.
“The opening upside gap of July 20 around 16,360-16,490 level is intact after two days of its formation. As per gap theory, if the said gap remains unfilled in the next couple of sessions, that gap could be considered as a bullish runaway gap and that could possibly suggest the market is in midway of trend,” Shetti said.
For the day, the index closed at 16,605.25, up 84.40 points or 0.51 per cent.
“One can retain an optimistic stance as long as Nifty50 sustains above 16,483 and looks for a target of 16,790. However, the last two candles on the daily chart not only resemble indecisive formations but are also accompanied by overbought reading on certain momentum oscillators. Therefore, a close below 16,500 levels can trigger a short-term downswing,” said Mazhar Mohammad of Chartviewindia.in.
Nifty Bank
Kunal Shah, senior technical analyst at
said that the Nifty Bank has continued its upward momentum and remains in a buy-on-dip mode, with strong support at the 35,800 level.
The immediate upside resistance for the index, he said, is placed at 36,500. “A breach of this lead accelerates the move towards the 37,000 level. The momentum oscillators are in the buy zone which confirms the strength,”the
analyst added.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
