Nifty may trade in 15722-16178 range for week ahead

The benchmark indices inched up further to an important level. The Nifty opened with a positive gap, after a volatile session, it closed near the day high. It gained by 143.90 points or 0.89 per cent and settled at 16132.90. The Bank Nifty and Fin Nifty gained by 1.74 per cent and 1.24 per cent. The Metal index has bounced by 3.79 per cent, is the top gainer on Thursday.

The Realty and Auto indices are up by 2.62 per cent and 1.35 per cent. Only the FMCG index declined by 0.08 per cent, while others closed with modest gains. The Market breadth is positive as 1461 advances and 600 declines. About 28 stocks hit a new 52-week high, and 103 stocks traded in the upper circuit. Reliance, Titan, and HDFC Bank were the top traded counters on Thursday in value terms.

As forecasted earlier, the Nifty has reached near the 61.8 per cent retracement level. For now, it almost filled the 13th June gap. For the day, the 50DMA is acting as resistance, which is placed at 16,121. A decisive close above this will be an added positive for the Nifty. The Nifty has formed a Hammer candle at gap area resistance. After a volatile session, index at a near resistance area shows some kind of exhaustion.

The index has just moved above the 50DMA is another positive for the market. In the last five trading sessions, the Nifty rallied by over 2.2 per cent. After opening with a big gap up on the weekly expiry day, the index is struggling to move further high. In any case, the index fails to sustain above 16121-178, which is not good for the markets.

A move in this zone, followed by a follow-through day, can extend the rally. The RSI above the 55 zone is one of the important technical events for a bullish move. In any case, the rally continues, and a weekly close above the 16178 is a very big positive for the market.

The index trading above the Anchored VWAP for the last two days, currently placed at 15984, will be a key support for now. Below this level, the 20DMA 15772 is major support. On a lower time frame chart, the momentum is low at the higher levels. The index may trade between the 15722-16178 range for the next one week. A break of the range will lead to a decisive trending move.

Now, it has to sustain above Thursday's high. As expiry is in place, Nifty might have registered this move. There are short opportunities for now and wait for a close below Thursday's low for a reversal.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)