Weekly Outlook of Nifty from Dec 24th - Dec 28th

Last week it was mentioned that ‘Nifty is still trading within the long-term resistance zones. Technical chart suggests that NIFTY Index is in overbought zone and index is not able to hold the gains at higher levels and closing near the low of the day consistently. For the week watch consolidation/correction at 5838-6000 with extension to 5750.’

During the week Nifty continued to trade in the same consolidation manner as earlier week. However Nifty Index breached the support of 5850 but it dropped to end only near the lower trend line support of (5815) low posted at 5823 and managed to hold the “precise trend deciding level of Nifty fut which was mentioned at (5838)” the low posted for the week was 5838.05.    

Sensex, I had mentioned earlier is now trading inside the long term resistance zone of 19132-19800 however it exactly dropped towards the support of 19137 posting a low of 19140.
The index has been consolidating within the long-term resistance zone between 19000 and 19800 for the past three weeks now. however the bull market still remains intact.   

The weekly chart of Sensex is getting support from its rising 20 day EMA. Even if the support gets breached, there should be stronger support from the 19000 level, which is the lower edge of the resistance zone.  Expect consolidation within the resistance zone to continue a bit longer.
In spite of some moderation in inflation and improvement in industrial production, RBI kept the interest rates unchanged. This indicates that economic growth will remain on low focus for a while. 

 
The weekly chart pattern of Nifty index is similar to the Sensex chart. The index is consolidating within a long-term resistance zone between 5750 and 5950, and currently seeking support from its 20 day EMA.
Conclusion: The Sensex and Nifty are continuing their consolidations within their long-term resistance zones. The consolidations are likely to continue for some more time before a likely upward break out.

Volatility may continue and one can remain bullish with cautiousness in market. Nifty index strong support is at 5815. Trend will enter in negative zone below 5802. However the Long term trend line support comes near 5718 and any close below this level we may see impact in the market. Fresh rally will start only above 5930 level. The global Indices are waiting for fiscal cliff solution. If solution is not reached to the result then negative impact may be seen in the market and under this situation Nifty may get dragged to the next support level of 5735 which is the 66.6% retracement level. Negative divergences are visible on technical parameters so be alert.  The supply zone remains 5892-5912. For the week let us watch 5950-5815 with extension limited to 6000/5750.