Medium Term Trend: ↑UP (Changes to down below 10500)
Nifty Continues to Soar: Nifty opened with a 100+ gapup this morning and maintained it through out the session. Finally closed at 11160 levels, up 140 points.
In last post we had mentioned that "there are chances that correction which started from 10850 levels few days back is already over (in choppy moves we witnessed in last couple of days) and now has opened a new leg on the upside. Technically its possible for Nifty to touch higher levels 11100-11300 from here"
In just couple of days Nifty has zoomed to 11200 levels already, in past 2 days we have seen 2 gapups. Now that we almost reached 11200 levels, markets are beginning to reach overbought zone. However that doesn't mean we will get to see a fall immediately. We may or may not see a correction as markets can stay in overbought zone for extended period of times. Having said this, this is the area ( levels around 11200-11300) where we can expect some pause. Market has run up sharply, almost 600 point rally in last 3-4 days hence some cooling off is expected.
On the downside, 10500-550 zone is the trend reversal point for Nifty for medium term and for short term, 10900 should act a good support. Any fall from here is likely to find support at 10900 levels or above. In case markets goes on to break 10900 levels then we can go and test 10600-10500 once again. On the upsid,e levels around 11300 are critical and if crossed we can see a further 300-400 point extension (towards 11800) in Nifty in coming sessions.
in Nutshell, inspite of markets entering overbought zone, there is nothing on charts which is suggesting weakness (yet). For bears to get into picture then need to break below 10900 levels in next 3 trading sessions (by Friday). If they manage to do it, then we can expect some more weakness and selling else bulls would continue to take prices higher and higher.
Happy Trading!
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