Nifty has resistance at 5760, 5830 levels - ICICIdirect

The Nifty traded choppy in just over a 100 point range in the holiday shortened week. Although the index kept making lower lows during the week it managed to float above the 200 day SMA (5627) on a closing basis. A sharp recovery in the last hour of trade on Thursday saw the index snap a two-week decline to close with modest gains.

The weekly price action resembles a Hammer, a small bodied bear candle with a long lower shadow and a negligible upper wick. It highlights the supportive efforts in the previous week to protect the 200 day SMA support.

In the coming week, holding the hammer candle's low (5604) and a follow through move above the candle's high (5718) along with consistent improvement in the market breadth would indicate a shortterm bottom in place near 5600 and revive bulls for an attempt to move towards the 5800-5850 region in the short-term.

From a short-term perspective, key resistance is pegged around the 5800-5850 region being the 50% retracement of the current down leg (5970-5604) at 5800 and the 50 day EMA currently placed around 5835.

Among oscillators, the 14 period RSI on the daily chart is exhibiting positive divergence as it has formed a higher low while prices have formed a lower low. It indicates early signs of waning downward momentum pending confirmation on the price front.

Breach of last week's low (5604) would see continuance of the downward momentum towards the key medium term support pegged around the 5550-5500 region, which is the confluence of the November 2012 low at 5548 and the upper band of the major rising gap area (5526-5447) formed in mid-September 2012 at 5526.

For the coming week, the Nifty has resistance at 5760, 5830 levels whereas supports are placed at 5604, 5550 levels.

Source : Equity Bulls

Keywords