The nifty was above the 18,500 level on Friday. It formed a Bullish Engulfing candle on the weekly chart. The 50 pack index is close to the overbought zone as per the 14 day RSI and analysts believe that the level of 18,605 may act as a key hurdle for the index while they expect the range of 18,500 -- 450 to act as support for the index.
Chandan Taparia of Motilal Oswal Securities noted that the index has been making higher lows on the daily chart for the last four sessions. He said that the index is forming higher highs for the last six weeks, and that is why it is forming higher highs on the weekly scale.
Nifty has to hold above 18,500 for an up move towards 18,600 and 18,881 levels. Taparia said that the support for the index is 18,442 and 18,250 zones.
The Nifty closed the day at 18,512. 75, up 28.65 points or 0.15 per cent. The NSE barometer was up 1.12 per cent for the week.
The daily candle signalled a breather in the market after the sharp up move of the last few sessions, and this could be considered an uptrend continuation pattern, said Nagaraj Shetti of HDFC Securities.
After surpassing the 18-100 hurdle a few weeks ago, the index has seen a decisive upside breakout of another resistance of 18,400 this week. The underlying trend continues to be positive. The Nifty is expected to hit new all-time highs by the end of the week. The trendline found by joining the preceding peaks has reached the rising trendline, according to Rupak De, Senior Technical Analyst at LKP Securities. He said that the momentum indicator has reached the falling trendline on the daily timeframe.
We can infer from the price chart and momentum indicator setup that the index is on the verge of strong directional movement over the short term. He said that a fall below 18,450 could lead to a correction towards 18,100 -- 18,000 at the lower end of the market, while a rise above 18,605 may cause a decent rally in the market.
Gaurav Ratnaparkhi of Sharekhan said the all-time high of 18,604 will be the make or break level to be monitored on a closing basis, which will determine further course of action - not only from a short-term perspective but also for the medium term. He said the immediate support zone continues to be 18,400 -- 18,380.