Nifty Weekly Outlook – July 1 – 5

Nifty recovered sharply in the last two trading sessions of the week gone by. In a prior  update posted on June 17, we had mentioned that the index is entering a buy zone. We maintain the positive stance from a medium-term perspective and expect the recovery process to continue. Kindly direct your attention to the daily chart of the Nifty posted below.

The index seems to have completed the next higher low last week at 5,586. We expect the Nifty to march towards the recent swing high of 6,230. The positive view would be under threat if the index falls below the major swing low of 5,477. Investors / traders may await a downward correction before considering long positions in the index. A fall to the support level at 5,750 or lower would be the preferred buying zone for those wanting to participate in the anticipated rally to 6,230+.

Let’s shift focus to the smaller time-frame. Have a look at the 15-minute chart of the Nifty posted below.

From the above chart, it’s evident that the recent rally has been sharp and one-sided. This rally has also pushed the Nifty to the natural resistance at the prior swing high of 5,864. The price has been struggling near this swing high today. Fast-twitched traders may consider a short position with a stop loss at 5,900, for an initial target of 5,750. Please be reminded that this is a low-risk but counter-trend trade.