Tech View: Nifty breaks out of sideways consolidation move. What should traders do next week?

Nifty, which has been forming higher highs for the last nine weeks, on Friday formed a bullish candle on the weekly charts as it broke out of the sideways consolidation move.

Now it has to hold above 18,442 zones, for an up move towards 18,600 and 18,888 zones while on the downside support exists at 18,333 and 18,281 zones, said Chandan Taparia of Motilal Oswal. Fear gauge index India VIX was down by 4.95% from 12.52 to 11.90 levels. Cooling off volatility gave strength to the bulls and aided the fresh leg of rally in the index.

Option data suggests a broader trading range between 18,200 and 18,800 zones while an immediate trading range between 18,300 and 18,650 zones.

What should traders do? Here’s what analysts said:

Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas
On the upside, we expect Nifty to target levels of 18,800, which is the 161.82% Fibonacci extension level of the five wave rise (18,060 – 18,420) on the hourly charts. The hourly momentum indicator has a positive crossover, and the daily momentum indicator is on the verge giving a positive crossover. Thus, both price and momentum indicators suggest that the positive momentum is likely to continue. Overall, from a short-term perspective we change the outlook to positive for the target of 18,800.

Amol Athawale, Technical Analyst (VP), Kotak Securities
The short-term market outlook is considered robust, with key levels at 18,350/62,000 acting as trend deciders. If the index moves above these levels, it could rise towards 18,600/62,800 and potentially continue further to 18,680/63,000. Conversely, if the index falls below 18,350/62,000, traders may prefer to exit their long positions. The rally was driven by Reliance Industries and IT giants, along with positive global cues. If the index falls below 18,250-18,200/61,700-61,600, it may retest those levels. For Bank Nifty traders, the 20-day SMA and 43600 are important support levels.

Rahul Ghose, Founder & CEO – Hedged
Nifty has now moved its base from the 18,000 level to the 18,150 level. This is the floor of the index now and any corrections up to this level should be looked at as a buying opportunity. It is only a matter of time before we see the all-time high levels scaled in both the indexes. Nifty might face some near term resistance between 18,700 and 18,800 but that would only be a speed-breaker in the scheme of things. The OI of the Puts have already started rising in the June month expiry right from the 18100, 18200 and 18,300 levels, and the final push will come once you see the 18,500 puts get written.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)