Nifty continued to edge higher and closed above 200-DMA. Nifty advanced for the fifth consecutive week and formed a outside bar on a weekly time frame. Price recorded a new high at 10934 and finally closed at 10902. With the formation of an outside bar, price witnessed a range expansion in the current week (370 points) compared to the previous week range (171 points). Outside bar generally indicates range expansion but sometimes, it also indicates capitulation, which means exhaustion where market psychology might have reached a short-term extreme.
With the start of the week Nifty opened at 10852, above the previous week high. Start from the opening price witnessed selling pressure indicating bears in control. With an increased selling pressure price recorded a low of 10562 on Tuesday. But at some point on Wednesday bears lost control as bulls overtook the control from bears. Bulls came into action near the diagonal support -uptrend line with touch points at 8806 and 9544. Price reentering the after recording a new weekly low was the first indication of a possible reversal. But price moving above the point of control confirmed this expectation. Above the point of control bulls pushed price to new high and finally to close at 10902, in the upper one third of the range.
This scenario reflects sentiment which has resulted due to net order flow. This kind of outside bar is known as a outside bar. With the formation of a outside bar, we form a expectation. But, only when price breaks the high of the outside bar, the expectation is confirmed. Price breaking the low of the outside bar will be the first sign of a possible reversal in the ongoing market direction. The low of the outside bar is the invalidation point for the present view. The current weekly is 2.4 almost the same compared to previous weekly of 2.6. The probable weekly returns is of 265 points from the weekly close, with a measured move in increments of 93 points.
The key level of the existing trend is at 10562 and the critical level at 10194. The point of control of Nifty Spot for the upcoming week is in the zone of 10748. Price staying above the point of control and on break of the weekly high can find minor resistance in the zone of 11026 and major resistance in the zone of 11119. Price slipping below the previous week high can find initial support at 10840. Price breaking point of control at 10748 can find minor support in the zone of 10655 and major support in the zone of 10562. Price breaking below the major support can move lower towards the zone of 10470 and 10377.
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