Tracking strong Asian market sentiment after a stronger US jobs report last Friday which lifted the US stocks sharply higher in last trading days of the week Nifty opened with positive note in first trading day of the week. However, market failed to gain further momentum and remained volatile before closing at 8734 up by 26.20 points from last week close.
Nifty in its daily time series chart has formed a Doji. The small shadow in both side of the real body indicating indecision and we need further confirmation to get the directional bias. Going forward key level to watch is 8750-8720. The breakout of the range is going to be the key for rest of the week trading session. Market is expected to see short term correction if it breaks below the lower end of the range at 8720.
Momentum indicators although slightly overbought, no signal yet visible, indicating market is topping out. Medium term trend rating is still very strong as long as market remained above 8600.
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In its longer time chart MACD indicator the signal line, MACD line and histogram are all trading above the zero line indicating medium term up trend. Overall we expect market to stay positive. Important support is at 8720 and only a move below this level trader should book partial profit from the existing long position and should re-enter around 8580-8600. Medium term up trend is likely to resume around this level and it is very unlikely that market will drop significantly below this level. On the upside resistance around 8750 is likely to offer short term supply.
Founder & CEO, CapitalVia Global Research
