Nifty trend for Friday

What a year it has been for Nifty! It touched the milestone of 12,400 levels at the beginning of the year and within no time, slid down to the levels of 7,500 in March. Thereafter, it witnessed a V-shaped recovery and went onto touch an important psychological level of 14,000 on the final trading session of the year. It took 25 sessions for Nifty to move to 14,000 levels from 13,000.    

It was not only the last trading session of 2020 but also, the last trading session of December series expiry. It was not a typical expiry day, as Nifty oscillated in a narrow range of 88 points and closed almost unchanged. Despite not registering significant gains on the final trading session of the year, Nifty gained nearly 15 per cent of the calendar year 2020. This was mainly due to a stellar run seen in the last two months of the year as in November, Nifty jumped 11.39 per cent while in December, it rose 7.81 per cent. Amongst the sector, Nifty Pharma and Nifty IT were the two showstoppers for CY 2020 as they soared 60.50 per cent and 55 per cent, respectively.      

Technically, the daily range of Nifty continued to shrink as it ascended & formed an indecisive candle for the third straight day, out of which, two are Doji candlestick patterns. This indicates that the bulls are taking a bit of a breather after a strong run. The trend of Nifty remains bullish as it continued trading above the important short-medium and long-term moving averages.      

Going ahead, the level of 14,000 would act as an immediate resistance as this is a round number and any sustainable move above the 14,000 mark, could lead to the 14,200 mark. On the downside, Monday’s gap area (13,771-13,811) is likely to act as an immediate support level as it coincides with the previous all-time high of Nifty.        

Interestingly, on the hourly chart, the RSI has not moved below the 60-mark, which led to the formation of a super bullish range and in this phase, the RSI tends to oscillate between the zones of 60 and 80. Bollinger band is seen narrowing and the price is not slipping below the 20-hourly moving average, which indicates that the bulls are in the driver’s seat, and at this moment, they are taking a breather. And soon, on closing above the level of 14,000, it would result in a fresh breakout and the target of 14,200 would be on cards.     

Our advice for traders would be to stay with the trend as long as Nifty does not close below its prior bar low and 5-EMA. Also, avoid contra trades.