Hello,
This week the markets finally made its move by breaking above the 5350 - 5500 range and closed near the next resistance of 5540. While 5500 was a straight line resistance, 5540 is important in the sense that it represents the upper end of the Ascending Channel we are in for the last 8 months.
The Ascending Channel if broken provides us a target of 6255 with a possible time frame being at the least 2 - 3 months. On the other hand, if market starts to slide down, the same Ascending Channel shall provide a support around the 5000 level. With current week being the last week for the August F&O, based on current open interest in Nifty, Nifty may ideally trade around 5450 - 5600 levels.
Over the last few days, there has been tremendous talk of a Indicator named "Hindenburg Omen". This is said to be a very bearish signal that can cause a fall worldwide. But as they say, market never behave according to majority view and with the continued flow from FII's, I believe that chances are very high that any such omen can fall flat on its face and prove to be a damp squib.
Of course , that should not stop us from having a stop loss for our long positions. Last Monday I had said that all long positions could be held with a stop below 5350. With the market having moved tremendously this week, I believe that the stop loss level can be raised higher and hence long positions can be held until a close below 5450.
Regards
Prashanth
Mythri Stocks & Shares Pvt Ltd.,
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