In the FundsIndia FREE weekly market outlook webinar held on Friday, we discussed the possibility of a relief rally in the Nifty. The index has seen a one-sided fall with a negative close on eight consecutive trading sessions. This has pushed the Nifty to an oversold region, justifying the case for a potential pull back rally.
As highlighted in the above daily chart of the Nifty, the index is now headed to an area of support. Any further fall would present a low-risk opportunity to consider long positions.
The stop loss for the long positions must be placed below the swing low at 5,477 for a possible rally to 5,850-5,900. Those adept at handling derivatives market may consider long positions via the options route.
We also discussed in the webinar that the last minute slide below the double-bottom at 5,680, in the 15-miunte Nifty chart, is a potential wash-n-rinse of weak or amateur traders. Any pull back today could trigger short-covering and may propel the index closer to our target zone.
From the Bank Nifty daily chart featured above, it is evident that the index is settling down near a crucial target cum support zone. The Bank Nifty could also play a part in helping the Nifty seek higher levels.
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