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Nifty

Nifty closed marginally higher above its ‘Spinning Top’ candlestick formation. It displayed a confident fresh life high closing & is expected to trend higher until its immediate 5 DEMA support at 22030 is intact. Since both its trend strength indicators remain diverging with RSI trending higher around its 64 while ADX is yet to cross its 20 level; their respective placement indicates lack of conviction in directional strength as of now. Option data highlights an immediate strong support zone at 22000 below which the range support is placed at 21800. Unwinding by call writers of 22100-22200 would push the index immediately towards 22400. The data now indicates outer major wings placed at 22500 & 21800 itself for the final week of the series. India VIX (Fear Index) too remains confined within 16 level (its 200 WEMA level) & 14.70 (its 5 WEMA); this consolidation is a sign for traders to avoid leverage positions on either side & wait for a firm breakout of this range. Hence the outlook remains cautious as sector rotational move would attract heightened volatility.

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