The Nifty has been in an up move for the last six sessions, gaining more than 350 points. It recently surpassed the crucial resistance of its 200-DMA.
The Nifty's previous top was placed at 10,775 on the daily chart, which has also been taken out on a closing basis. The index is now trading above its 20, 50, 100 and 200-day EMA which indicates strength in the intermediate trend.
Higher top and higher bottom formation is well intact on the Nifty daily chart. At 10,882, Nifty has completed the 50 percent Fibonacci retracement of the entire fall seen from 11,760 (all-time high made in August 2018) to 10,004 (bottom of Oct 2018).
Now, the next target for the Nifty is placed at 11,089 which happens to be 61.8 percent retracement level. Oscillators and Indicators have also been showing strength on the daily chart.
RSI has been moving up and has now reached at 62, which is still at a fair distance from the overbought zone. The MACD has also reached above its signal line and equilibrium line.
Support for the Nifty is now shifted upward to the 10,700-10,775 range. It would be advisable to remain long in Nifty for the upside target of 11,089, keeping a stop loss at 10,700 on a closing basis.
As far as Bank Nifty is concerned, it has retraced more than 61.8 percent of the entire fall seen from 28,388 (August 2018 high) to 24,240 (October 2018 low). This development negates the chances of resuming downtrend, which initially started in August 2018.
The next resistance for the index is placed at 27,150 and 27,410 whereas support levels have also shifted upwards towards 26,380 in the spot market.
The Nifty Midcap index has reached the highest level since September 26. We expect market breadth to improve further. Going forward, we see an opportunity in the auto sector where momentum buying could emerge.
Two-wheeler companies are expected to outperform in the coming days. To conclude, the trend of the market is bullish and staying with the trend would be a better strategy. Do not try to anticipate the top. Investors should trade with trailing the stop losses at regular intervals.
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Source: Moneycontrol
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