The Nifty index has had a rough patch for the last few days that has resulted in it falling by roughly 360 points. But, I believe on Friday the close shall be at the 10,230 mark or higher as the nifty shall have a rally for the day.
Candle Signals: The Nifty 50 over the past two trading days has had a varied array of candle signals ranging from a Doji on Tuesday plus a large bearish candle on Wednesday and a Large bullish candle on Thursday. But I would like to pay keen attention to the Doji signal as that came a support level that has held previously while at the same time it was at the end of a downtrend. This change in the trend direction was lent a confirmation yesterday by the large bullish candle.
Moving Averages: On the daily chart we see that the 5 day has been enveloped by yesterdays bullish candle whilst at the same time on Wednesday it had changed its direction abruptly and had started sloping upwards. On the other hand we see the 50 day MA is about to be breached by the index.
Support and resistance: On the support front, the equity is at a currently in a Fibonacci support zone whilst at the same instance the closest resistance level is at 10,230. But this is a rather weak resistance line.
Bollinger Bands: The Bollinger bands on Tuesday and Wednesday had given us all the details needed for comprehending that the trend was changing. Firstly, on Tuesday the Doji Candle Signal had managed to come at the lower end of the Bollinger band and it utilised this band as a support line. Whilst on Wednesday, we saw the bottom of the red candle protrude from the Bollinger lower support line slightly hence giving us a clear indication that on Thursday the market was going to have a prop up. Whilst on Friday I am certain that the centre line in the Bollinger band shall act as a resistance for the equity but it shall reach that point in its trading hours as a high without a doubt.
RSI: The RSI of the index on my setting is steeply rising at an angle that was last seen in August of this year which had aided the index in climbing significantly. The RSI stands at 45 on my setting.
Overall, I can state that I believe that this index shall close the week at or above the 10,230 mark as the candle, Bollinger, moving average and RSI mix indicate that. But if there is a tailspin moment in the probability then at the most minimum the high of the index shall be at this mark hence making it a good day anyhow for day trading when taking all risks into concern.
Do share your views at sahluwalia032 (twitter).
Sandeep Singh Ahluwalia
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