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Bulls In Control – Break Above 11,750 Could Take Index To A New High

On the technical front, the index stayed firmly within its rising positive channel on the daily charts, after having found strong support at the key short term 20 DMA mark last week.

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The index witnessed a strong rise last week, further underscoring the fact that the bulls remain firmly in control at the moment. Overall intra week gains were around 300 points, with Friday witnessing powerful rallies across market capitalisations. Positive global sentiment, aided by the resumption of US China talks, as well as a successful Brexit deal, helped spur the rally further. On the derivatives front, we saw fresh longs being added across the board in both the NIFTY and the Bank NIFTY, putting the bears further on the back foot. FIIs long/short ratio in NIFTY futures also trended higher, on account of unwinding of short positions and marginal addition of long positions. 

On the technical front, the index stayed firmly within its rising positive channel on the daily charts, after having found strong support at the key short term 20 DMA mark last week. The upper band of the channel on the daily charts appears to be forming somewhere near the 11,750 mark, which remains the next key resistance for the index. A decisive break out over this level will almost certainly propel the NIFTY to new highs. On the weekly chart, we saw the formation of a long green candle, as well as a strong break last the 20 WMA mark. The slanting shape of the upper Bollinger band does appear to be pointing to the same intermediate resistance level of 11,750 - 11,800. 

Going forward, all eyes will be on Q3 results, as well as the statuses of the two key ongoing global issues. Probabilities of a breakout beyond 11,750 remain high, and the previously predicted medium term target of 12,125 continues to remain within sights. Bearish positions continue to be fraught with risk at this stage.

DISCLAIMER: Futures, stocks and options trading involves substantial risk of loss and is not suitable for every investor. If you do not fully understand these risks you must seek independent advice from your financial advisor. All trading strategies are used at your own risk.


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