16 Jan: Edelweiss Technical Reflection (ETR)

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Edelweiss Technical Reflection (ETR)

On the final day of the week, Nifty traded in a range of 64 points and managed to end the day with higher by 0.72%. The markets opened on a positive note and saw some selling initially to close the minor bullish gap, however support from the 21 hourly EMA helped propel the index higher above the 4877 resistance to nearly test 4900. The final couple of hours saw the index trade in a volatile manner to finally settle at 4866. Nifty has closed in the green for the second week in a row with a gain of 2.5% and even managed to claw back above the 200 week SMA. Coming back to the daily chart, another ‘spinning top’ candle clearly suggests indecision which could lead to a round of correction, along with the resistance from the psychological 4900 barrier. Momentum oscillators on the hourly chart have rolled bearish and are showing initial signs of negative divergence; the daily oscillators consolidate their bullish stance with the MACD breaking above the zero line. Trading volumes are on the rise and the market breadth traded in favour of advances. The early part of the week could see some corrective price action down to 4800 / 4780 with the bullish pivot being at 4780 (21 DEMA and trend line support), followed by another advance towards the 4920 / 4950 target area. The short-term trend will reverse on sustenance below the bullish pivot of 4780.

Sectoral performance was mixed with gains registered by Metals (+3.21%), Cap Goods (+2.86%) and Power (+2.39%) indices. On the losing side were Consumer Durables (-0.40%), Oil & Gas (-0.38%) and IT (-0.04%) indices. Outperformance by the broader market continues to be the center stage with Mid-cap and Small-cap indices gaining of 1.14% and 1.44% respectively.

Bullish Setups: COAL, PIHC, IDEA, RIL, DITV

Bearish Setups: INFY, IGL