Nifty trend for Monday

In the last week, Nifty gained almost 2 per cent and interestingly, hit its lifetime high in each session before finally ending the week above the 14,000 mark for the first time ever.   

Nifty had formed an indecisive candle in each trading session last week. This could be witnessed from the range of the week as the latter stood at 238 points, which is the narrowest in the last four weeks. It ultimately led to the formation of NR4 on the weekly timescale. On the daily chart also, Friday’s bar formed a NR7, which clearly indicates that the volatility has diminished and this can be verified from the fact that India VIX had plummeted more than 7 per cent on Friday.   

As the markets ascend and the daily range of Nifty is shrinking with every upmove, it indicates a loss of momentum. This can be gauged from the fact that in each session, Nifty has not been able to close too far away from the opening price. However, the loss of momentum does not mean that there is a change of trend in the index. The trend remains strong as the higher high & higher low formation continues and Nifty on the daily chart is running along with the upper Bollinger band, which indicates a strong trend.   

Going ahead, the 5-EMA that is placed at 13,934 is an important support level, followed by the zone of 13,771-13,811, which is likely to act as the next support level. On the upside, the level of 14,100, followed by 14,220, is likely to act as a resistance level.   

As there is no evidence of any sort of weakness on the chart, we reiterate that one should remain in tune with the trend and keep a close eye on 5-EMA as a close below this level could lead to some weakness in Nifty in the near term.