Moneycontrol
Last Updated : Jan 01, 2019 12:42 PM IST | Source: Moneycontrol.com

Nifty likely to trade between 10,000 and 12,300 in 2019: Narnolia

During 2018 calendar year, Nifty has received strong support from 10,000 levels twice once in March when initial period of sharp selling in mid and small cap stocks started and secondly during October when liquidity crisis in money market was at its peak.

Moneycontrol Contributor @moneycontrolcom

Shabbir Kayyumi

Nifty in 2019 is expected to trade between 10,000 and 12,300 based on a rising channel that has unfolded over the last five years.

Recap of 2018 with technical analysis

Nifty after oscillating between 10,000 and 11,700 is ending the year near the midpoint of this range resulting in above 3 percent year-on-year growth. During 2018 calendar year, Nifty has received strong support from 10,000 twice once in March when initial period of sharp selling in mid and small-cap stocks started and secondly during October when liquidity crisis in money market was at its peak.

While positive divergence in MACD had created a market reversal in March, strong positive divergence in RSI on the daily chart has caused the recent smart bounce back in the Indian market.

Divergence followed by a long green (bullish) candlestick has confirmed the reversal of prices both the time. Yearly high was made when RSI showed a negative divergence on the daily chart accompanied by a large red (bearish) candlestick. Also, a small zone between 10,850-11,000 acted as strong supply zone during May-June and now during November- December 2018.

1

Technical outlook for 2019:

Going forward, for 2019, the high and low of 2018 are major support and resistance for the market. Technically, Nifty in 2019 is expected to trade between 10,000 and 12,300 based on the rising channel that has unfolded over the last five years. Key levels for the calendar year 2019 are: 10,000- 10,400-10,600-11,084- 11,700 and 12,400.

Uptrend continuation with a rising channel

Nifty is trending in a rising channel almost from the last five years. This indicates uptrend unless price breaches lower trend line which is placed around 10,000 marks.

Nifty should continue its upmove towards previous high (11,760) and upper trend line of the rising channel (12300). However, rally will accelerate only above 11,084 levels which is 61.8 percent Fibonacci retracement of recent fall and previous swing top too.

2

Conversely, a decisive close below red trend line (10,400) will push prices towards the strong base of 10,000.

200-DMA & 50-DMA

Nifty is trading above 20-DMA (10,780), 50-DMA (10,600) and the most important 200-DMA (10,775) implies short-term, mid-term and long-term trend is bullish. However, major hurdles are the supply zone and 100-DMA trading around 10,950. If it sustains above these levels, the index can extend this uptick till previous high (11,760).

3

Majority of the short-term technical parameters on the daily chart are indicating bullish bias whereas the occurrence of bullish crossover of 20-DMA & 50-DMA is also supportive for an up move in mid term. At the same time, one of the most popular trading system Parabolic SAR has also given bullish signal.

Trendline support & RSI

Intermediate supports are provided by rising support line S1 as indicated in below chart currently placed around 10,400. However, immediate resistance is last three month’s high placed at 11,084 above which prices can surge higher towards 11,760/12,300 marks.

Monthly RSI is trading above 50. It signifies the long-term trend is positive and a fresh rally will begin above 11,050. ADX is trading at 32 and +DI above –DI also set a positive tone for strength in bullish trend.

On downside, the index will give a fresh break down on a decisive closing below 10,400 (S1 line) whereby it can extend its fall towards the previous strong base of 10,000.

4

Conclusion

-Technical target for Nifty in 2019 is 12,300

-Nifty’s short-term, mid-term and long-term trend is positive, and immediate resistance is at 11,084 above which it can surge higher till 11,760/12,300

-10,600 is the immediate key support for Nifty and overall movement is likely within the range of 10,000 and 12,300. Meanwhile, to retain bullish bias, Nifty needs to sustain above 10,400, and a close below it shall set a tone for a mid-term selloff to the levels of 10,000.

The author is Head — Technical & Derivative Research at Narnolia Financial Advisors.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
First Published on Jan 1, 2019 12:42 pm
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