There has been a consistent Upmove since the recent low of 5195 and Nifty is looking overheated . There may be some cooling down before any move of consequence unfolds . In general, the Next Week may be of a short term correction and consolidation within a range. Let us checkout the Trading Insight and important Levels for trade now .
1. Indicators :
The Weekly chart is Neutral to Positive in bias , trading above the Mid B.B. of 20wma and targeting the Top B.B. at 5900 level.
The Daily chart is Overbought , trading near the Top B.B.
2. Trendline and Pattern :
Nifty is trading in a Triangle pattern since the start of the year and now is again reaching the Top Trendline which is expected to offer some Resistance.
Break and trading above this Trendline will be Bullish for Medium term too.
3. Fibonacci & MA Levels :
The chart below shows the important Fibonacci and Moving average Supports and Resistances levels . There may be consolidation between the 50dma and 200dma now.
4. Volume Profile :
The 10d Volume Profile shows no apparent selling at the top which may imply that any downmove now may just be a consolidation for 'buy on dips' for a further upmove in short term.
5. Option Analysis :
Its the start of the July series so the data may not be sufficient to predict the outcome but largely the 5300-5400 level looks like a good Support and 5800 level as a Resistance. The Builtup of Open Interest at 5500 Puts and that at 5700 Calls indicate a likely trading range of short term .
6. FII Data :
The FII's have been consistent Buyers lately and have ended the June series as Positive by some big buying in the last week .
This liquidity flow if maintained may have an impact on the Medium term oulook also .
7. Elliott Wave Analysis :
Please check out the Basic EW count and a probable Short term count followed by me - CLICK HERE
As per the Preferable Count , we may now be in the 4th wave of the 'a' leg of the larger B wave of the second zigzag.
(If indeed its a B wave then it is doing a good job of sucking, as calls for a new high and crossing of 6000 levels are already flying around.)
Alternatively to keep an unbiased view , I checked the Weekly charts for a larger picture and found that we may be in a 4th wave (may have ended recently) since 2009. The 4th may have ended in a copybook Flat correction of 3-3-5 subwaves and wave 1 of the 5th has started (check the positive diversion ). It may also end in a Triangle as a-b-c-d-e with current leg as 'd' .
It is on a crossroad as per the EW counts for the Medium & Long term outlook but as of now not jumping to any change in Preferable count and just trading as per short term view here.
The Strategy for Trading the next week should take care of following points as the data and insight above suggests -
- The Short term Bias is Up with no signs of weakness .
- The larger Trading range may be 5750 - 5500 with maximum action in 5520-5650 range.
- Closing above 5750 and below 5480 may decide the Bullish/Bearish bias further.
- Positional shorts below 5450 only.
- 5530 is a High Volume node as well as apprx. 5Wema and 50dma . One may keep this level as SAR for the next Week.
Buy on dips for futher upmove in near future can be done with a strict s/l of 5480 closing basis , for a good risk-reward.
Have a Profitable Week ahead !!!