if the bulls continue the domination & manage to surpass the hurdle zone of 10,400-10,440 on closing basis then the stage would be set for a deeper retracement.
The Nifty, in the last week, witnessed extension in the short term pullback that had originated from sub 10,000 levels in the penultimate week. The bounce is looking to stretch beyond the hurdle zone of 10,300-10,350. In terms of Fibonacci retracement, the index is aiming for 38.2 percent retracement of the previous fall.
The recent history, however, shows that any attempt to form a minor degree pullback fizzled out near the crucial daily moving averages. Going by the same structure, the transgression by the bulls is likely to be countered by a strong reaction by the bears.
The weekly as well as the monthly chart shows that the index is not yet out of the woods & the larger outlook is still in favour of the bears.
Thus from trading perspective, cautious approach would be prudent in the current market scenario.
Breach of the level of 10,290 can be taken as an opportunity to initiate fresh short position for the initial target area of 10,000-9,950 on the downside.
On the flip side, however, if the bulls continue the domination & manage to surpass the hurdle zone of 10,400-10,440 on closing basis then the stage would be set for a deeper retracement. In that case, 10,560 & 10,700 will be the key levels to watch out for.
Two stock ideas for short term:
Zee Entertainment Futures: Sell | Stoploss - Rs 597 | Target - Rs 518
Zee Entertainment is in process of forming a complex correction. The recent bounce was nothing but a part of the overall correction. The pullback retraced 61.8 percent of the first leg of the fall where the next round of selling has set in.
Thus, in terms of the wave structure, the stock is expected to form next leg down. This means significant correction from current level.
Tata Global: Buy | Stoploss – Rs 267 | Target – Rs 299
After a multi week decline, Tata Global formed a base near the support zone of Rs 255-250. Over there, multiple parameters extended support to the counter, resulting into a fresh rally.
On the way up, the stock has formed an Impulse, which suggests that it is poised for a substantial upside. The short term momentum indicators are in sync with the price rise.Disclaimer: The author is Senior Technical Analyst, Sharekhan. The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.