Unless Nifty retreats below its crucial daily moving averages, which are near 10,350-10,250, it has a scope to stretch till 10,560-10,700 on the upside.
The Nifty witnessed its third successive positive week in the week ended April 13. During the course of the rise, the index surpassed multiple parameters including its crucial daily as well as weekly moving averages, which will now act as supports.
Since February, on occasions of minor degree bounces, the index was facing resistance near its crucial daily moving averages. This time, however, it has defied the structure as it has climbed above the hurdles without ambiguity.
This opens up an alternate wave count suggesting a larger pullback. In other words, the Nifty is expected to retrace the entire fall from 11,171 to 9,951.
In terms of Fibonacci retracement, the pullback is attempting a deep retracement with key levels at 50 percent and 61.8 percent retracement marks: 10,560 and 10,700, respectively. The hourly chart shows that the entire rise is a well channelised one, which continues to guide the index higher.
The Nifty, however, has seen a straight rise over the last few sessions, indicating it can pause for a breather before stretching higher.
From a trading perspective, a potential minor degree dip or a consolidation can be taken as an opportunity to initiate fresh long positions.
On the downside, 10,400-10,350 is a key support zone from a near-term perspective, which can induce fresh buying interest. Unless Nifty retreats below its crucial daily moving averages, which are near 10,350-10,250, it has scope to stretch till 10,560-10,700 on the upside.
Stock ideas for the short-term:India Cements: Buy | Stop-loss: Rs 144 | Target: Rs 165 | Return: 9%
India Cements, in its recent rise, formed an Impulse on the upside. The same has been retraced nearly till its 61.8 percent retracement mark. The Golden Ratio mark is a high probability level for the next set of Impulse to start off on the upside. In terms of the price patterns, the stock has a potential to form an Inverted H&S, which is a bullish pattern. Also, the short-term momentum indicators are in line with the bullish expectation.JSW Energy: Buy | Stop loss: Rs 78 | Target: Rs 87 | Return – 8%
JSW Energy has been trading with a sideways to downward bias for the last few sessions. The price action reveals that the stock has taken the form of a bullish Flag pattern and is on the verge of a breakout on the upside. Towards the lower end of the pattern, crucial daily moving averages are offering support to the stock. Hence, this is an ideal level to enter on the long side. The risk-reward ratio is also attractive to initiate fresh long positions.Disclaimer: The author is Senior Technical Analyst at Sharekhan. The views and investment tips expressed by the investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.