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Nifty

Nifty retained its close above its 5 DEMA support of 25190 despite of the weak start due to global setup. It has been displaying narrow ranged candlestick formations but it has managed to retain its close above its 5DEMA support for almost 14th session on a consecutive closing basis. Both its trend strength indicators are still showing strength; thus, it is expected that the current bullish series of narrow ranging bodies will continue without any indications of a reversal formation. While the ADX has been rising steadily over 34, the daily RSI is approaching its overbought zone but shows no signs of exhaustion or divergence in strength. Options data suggests that support will be steady near 25,000 for the rest of the week, with a minor obstacle at 25,300 and a significant hurdle at 25,500. Unwinding in the 25300 strike today would unfold strong short covering momentum. We are still optimistic that over the first half of the series, the index will rise steadily towards 25450. Technical targets at 25810 and 25990 may come later. In the unlikely scenario that the index has a weekly closing below 24960, the entire calculation could fail. Momentum trades have to be trimmed down if the index falls below 25080 on a closing basis.

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