05-07-2021 11:07 AM | Source: ICICI Direct
The daily price action formed a high wave candle with a higher high -low signalling consolidation with positive bias - ICICI Direct
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NSE (Nifty): 14725

Technical Outlook

* The index witnessed follow through strength to Wednesday’s inside bar and formed a bull candle carrying higher high-low, indicating conclusion of secondary correction

* The index has decisively closed above the previous session's high (14638) after four session’s corrective move, indicating rejuvenation of upward momentum that makes us believe the Nifty would resolve higher and head towards upper band of consolidation at 14900 in coming sessions. Eventually, we expect the index to challenge 14900 and gradually retest lifetime highs of 15400 in May-21. Hence, any dip from here on should be capitalised on as an incremental buying opportunity amid progression of Q4FY21 result season

* Key point to highlight is that, over past five sessions the index has retraced 61.8% of preceding five session’s ~900 points up move, which is larger in magnitude compared to the early March rally of 868 points. The shallow retracement highlights a robust price structure that augurs well for next leg of up move

* The Nifty midcap index is on the cusp of resolving out of past two month’s consolidation, indicating rejuvenation of upward momentum. Meanwhile, small cap index is sustaining above the past two month’s consolidation breakout, highlighting strength that augurs well for acceleration of relative outperformance

* Structurally, we do not expect the index to breach the key support threshold of 14200 that has been held despite elevated volatility owing to concern over second Covid-19 wave. Hence, dips should be capitalised on as buying opportunity as level of 14200 is confluence of: a) Lower band of falling channel at 14200 b) 100 days EMA at 14255 c)April-21 low placed at 14151

* In the coming session, index is likely to open with a positive bias tracking buoyant global cues. We expect it to trade with a positive bias while maintaining higher high-low formation. Hence, use intraday dip towards 14795-14825 to create long for target of 14912

NSE Nifty Daily Candlestick Chart

 

Nifty Bank: 32827​​​​​​​

Technical Outlook

* The daily price action formed a high wave candle with a higher high -low signalling consolidation with positive bias . The index is seen forming higher base above the 61 . 8 % retracement of previous two week up move (30405 -34287 ) . A follow through up move above Tuesday’s high (33012 ) will signal a pause in the current profit booking trend

* Going ahead, after a up move of more than 3800 points in just seven sessions, the index is seen consolidating in the broad range of 31500 -34000 . Therefore we believe dips should be capitalised as buying opportunity, as we expect index to head towards 34900 levels in the coming month being the 61 . 8 % retracement of the entire decline (37708 -30405 ) .

* Key point to highlight is that over the past six sessions the index has retraced 61 . 8 % of preceding seven session’s up move (30405 - 34287 ) . The slower pace of retracement indicates a higher base formation

* The slower pace of retracement after the recent up move of 3880 points, which is the larger in magnitude compared to late February up move of 2256 points highlights robust price structure

* The index maintained the rhythm of not correcting more than 20 % as witnessed since March 2020 . In the current scenario it rebounded after correcting 19 % from the all -time high (37708 ) . Hence it provides favourable risk -reward setup for the next leg of up move

* The index has immediate support at 32000 -31500 levels being the confluence of the previous week low and the 61 . 8 % retracement of the current up move (30405 -34287 ) . While the major support is placed in the range of 30500 -30000 levels

* In the coming session, the index is likely to witness gap up opening tracking firm global cues . We expect the index to trade with a positive bias while sustaining above the psychological mark of 33000 . Hence after a positive opening use dips towards 33045 - 33105 for creating long position for the target of 33240 , maintain a stoploss of 32990

Nifty Bank Index – Daily Candlestick Chart

 



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