NIFTY 50, Indian Equities – Technical Outlook:
- The Nifty is attempting to break above key resistance.
- The probability of a move to a fresh record high is increasing.
- What are the key levels to watch?
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NIFTY 50 TECHNICAL OUTLOOK – BULLISH
The Indian stock market appears to be preparing for the next leg upward that could possibly push stocks to fresh record highs.
That’s because the bullish momentum in the benchmark index, the Nifty, is accelerating following the break above the median line of a rising pitchfork channel from September. In general, a rise above the median line of a pitchfork channel is a sign that the market is shifting to a ‘higher gear’. More often than not, this opens the way towards the top edge of the channel.
NIFTY 50 Daily Chart
Chart Created Using TradingView
The upper edge of the channel is an uptrend line from September (now at about 18590), which roughly coincides with the 2021 record high of 18604. Interim resistance is on a horizontal trendline from April at about 18115. A decisive break above the 2021 top could pave the way towards the psychological 20000 mark.
Indian stocks continue to outperform some of their peers, which are struggling around year-to-date lows. Nifty’s retreat to 15183 in June was less than a 38.2% retracement of the 2020-2021 rally, and the index has not looked back since. Longer-term charts, including the monthly and quarterly, remain bullish.
NIFTY 50 Monthly Chart
Chart Created Using TradingView
On the downside, there is immediate support on the 10-hour moving average at 18030 (on the hourly chart), followed by last week’s highs of 17800-17850. Stronger support is at the early-October high of 17428.
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— Written by Manish Jaradi, Strategist for DailyFX.com