Weekly Outlook of Nifty from Dec10th - Dec 14th

Last week it was mentioned ‘5950 and 6000 is the real test for the market. If it manages to cross above then expect Nifty index to make a new bull market high. So I think NIFTY might lose steam at 5950-6000 for consolidation/correction mode finding strong support at 5830-5780. Nifty is about to complete end-to-end move of set short term range of 5500-6000. However, further extended gains into 6349 in the short term can be expected but need to stay cautious and prudent to exit “long” positions at 5950-6000 and wait for close watch on price action there. Be cautious near the resistances.’

During the week NIFTY index exactly acted as predicted, in spite of the FDI decision in retail sector, NIFTY could not cross the barrier of 5950. Index reached up to 5949.85 and met the objective (5950) taking support from the mentioned 5830 level placing a low of 5838. Index could not sustain at the higher level and settled the week just around 5920. One could see that the expectations were very high for the upside break-out and everyone was extremely bullish but market deceived everyone by touching the critical resistance level at 5950.

Sensex has seen slightly higher weekly close inside the long-term resistance zone between 19132 and 19800 on the weekly chart. The index has been trading within an upward-sloping channel since touching a low of 15136. The top end of the channel is currently at 19800, which match with the top end of the resistance zone which means 19800 might act as a tough resistance in the near term. Technical weekly indicators are bullish but looking overbought also there are signs of negative divergences. Expect the index to correct/consolidate before attempting to cross 19800.

Nifty has reached the levels of 5950 which is a long-term resistance level. The daily technical indicators are looking overbought, and are showing negative divergences by failing to touch new highs. There is a good possibility of some correction/consolidation before the 5950/6000 level can be crossed. The upper end of the parallel channel within which Nifty has been trading for the past year is currently at about 6150. That will be the next level of resistance beyond 5950/6000. On the downside, good combined support from the rising 20 day EMA and the 5750 level is likely.

Conclusion: Indeed to say that market is in strong bullish mode but it has found resistances at exact technical levels. On hourly chart Nifty is falling towards its lower trend line support which is around 5815. Thus falling till 5815 is not at all ruled out. I highly expect Nifty to correct first and then to resume upside. For lower target Nifty must break 5870 level. On daily and weekly chart RSI is in overbought zone so traders must be alert on up side. Also one should remember that we are trading in fifth wave and nifty has already retraced. The Derivative data suggests that the upper side for NIFTY Index is restricted at 6000. Technically speaking NIFTY index has formed “Dragonfly Doji” candlestick on Thursday followed by “Bearish Engulfing” candle on Friday. It is a bearish signal for the coming week. Only a break above the resistances one should expect 6150.