Hello,
Weekly View:
While the action in the week was very limited, there is subtle hint that the markets are not going to come down anytime soon. Of course a reading of the charts provides no Guarantee to such a thing not happening, but a break of 5400 in my opinion should for once and for all provide a clear direction to the market which has been trading directionless for a long time now.
5400 on Nifty is the recent high achieved by Nifty and a break of that should alter the medium term view of Nifty and wherein we can look forward to bigger targets. One such indication comes from a chart formation known as Pennant (which itself also can be part of a Pole and Flag). One such pattern can be identified in Nifty and since we did have a breakout of it (on Hourly charts) on Friday, the target calculated using the prescribed methodology points us to a target of around 5600 (Short Term) and above that 5800.
Of course all of it will get invalidated if Nifty is unable to surpass the 5400 level and instead breaks the 5200 level which has been a level of strong support in recent times. Such a move will mean a definite end to the current rally and can pull Nifty back to 5000 or even 4800 levels. But probability based on current Trend Strength and Option Open Interest points out to a bullish scenario coming true rather than the bearish one.
Daily View:
With Nifty breaking out of its 5335 - 5350 resistance on Friday, the next logical resistance comes to 5385 - 5400. Whether we break the same today or not shall depend more upon how the European Markets fare in the later half of the day. On the lower side, Nifty gets support at 5320 - 5300 and 5265.
Regards
Prashanth
Mythri Stocks & Shares Pvt Ltd
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