Nifty continued its northward journey for the fourth day on July 6 to shut at a four-month excessive at 10,764.
Over the last week, Nifty managed to shut above the 61.eight p.c retracement stage of the whole fall seen from 12,430 to 7,511, indicating energy within the upward rally.
On the weekly chart, Nifty has shaped a bullish greater high greater backside sample. The same sample can also be noticed within the midcap and smallcap indices, indicating broad-based rally within the markets.
ADX (14), the development energy Indicator, is buying and selling above 25 ranges, indicating robust momentum within the uptrend.
Earlier resistance of 10,500-10,550 would interchange its function as a assist.
Within the derivatives phase, we’ve seen Put writing at 10,500 ranges. Subsequently, 10,500-10,550 ranges would act as rapid assist for the Nifty.
On the upper aspect, resistance is seen round 10,900 the place 200-day SMA is positioned.
Within the month of June, the advance-decline ratio stood at 1.54 ranges which was the best month-to-month advance-decline ratio since Might 2009.
This Signifies that midcap and smallcap indices that outperformed the benchmark indices throughout the previous couple of months after two years of underperformance beginning January 2018 are prone to do effectively throughout the coming months additionally.
Our recommendation is to stay lengthy within the Nifty with the trailing cease lack of 10,500 ranges.
Resistance is seen within the neighborhood of 10,900-11,000 ranges. After a pointy rise within the benchmark indices throughout the previous couple of days, the main target of the merchants must be on midcaps and smallcaps which are prone to proceed their outperformance throughout the coming weeks and months.
Listed below are three purchase suggestions for the subsequent 3-Four weeks:
The inventory broke out from the downward slopping trendline final Friday, adjoining the highs of February 10 and June 22, 2020, on the day by day chart with greater volumes.
It’s buying and selling above an essential double high resistance stage of Rs 665. Day by day RSI is positioned above 70 ranges, indicating a bullish setup for the inventory.
+DI is buying and selling above -DI, indicating bulls are having an higher hand.
After the consolidation of the previous couple of days, the inventory resumed its uptrend by rising 5 p.c with the rise within the volumes.
Within the by-product phase, we’ve seen an aggressive build-up of lengthy positions. Oscillators and momentum indicators like RSI and MACD are displaying energy within the inventory.
The inventory has damaged out on the day by day chart to shut at a 10-day excessive with greater volumes.
It has shaped a robust base on the upward slopping trendline, adjoining the lows of March 25, Might 18 and June 12, 2020.
Within the by-product phase, we’ve seen an aggressive build-up of lengthy positions.
Day by day RSI is positioned above 70 ranges, indicating a bullish setup for the inventory. + DI is buying and selling above -DI, indicating bulls are having an higher hand.
(The creator is Technical Analysis Analyst at HDFC Securities)
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