Nifty Weekly Outlook April 1-5

In the Daily Market Commentary on Thursday, we had mentioned that there was a case to consider long positions in the Nifty as the risk was very marginal and affordable.  From the daily chart of the Nifty, it is apparent that the major swing of 5,548, recorded on Nov.20, is still not breached.

From a technical standpoint, the trend in the Nifty would remain bullish from a medium-term perspective as long as this swing low at 5,548 is not breached. Having said this, it is also important to take note that the Nifty is tracing out a series of lower highs and lower lows since the recent high of 6,111 recorded on Jan. 29.

From a trading perspective, we would view any dip in the Nifty as a buying opportunity with a stop loss at 5,510 (below the swing low at 5,548) for a target of 5,880, basis SPOT NIFTY. We suggest long positions mainly on account of the risk which is negligible. Other than that, we do not see any compelling reason to consider long positions.

Those interested in Bollinger Bands would have noticed the classic positive divergence highlighted in the daily chart of the Nifty featured below.

The long trade idea is low-probability &  low-risk kind of trade meant for those compulsive traders.

A fall below 5,510 would not only result in long positions being stopped out, but would also lead to a breach of the swing low at 5,548, This would be a bearish sign and would result in an eventual test of the support at 5,250-5,300 range.

As the immediate flow is down, a more logical trade would be to consider short positions in the Nifty on signs of weakness at the upper red line at 5,880-ish, with a stop above 5,972, for a trip down to 5,650.

Trade Safe and Don’t Get Hurt.