On Friday, though closing higher than the previous day and having the highest weekly closing, the Nifty may be stuck with a couple of minor negativities for today, (minor being relative).
The first, today would be the thirteenth day going up on the trot, barring a very insignificant falter along the way on November 9, a loss of three points from the previous close. The very recent similar movement lasted about fifteen days before correcting mildly, only to get on with it. That was the lead up to 2663 where came the sharp slide which lasted about fifteen down days with a couple of feeble pullback attempts.
The second negativity on Friday was the inability to test and cross 2635. The double attempt to the up was topped out at 2632 followed by a slide to 2611, and the end came after a struggle at 2620, where over 2625 would have been much nicer.
The two points raised above may appear to be at odds with one another, though they are not:
As the Nifty appears to be heading higher to possibly test and break past the previous high, one would like to see it test lower levels sometime soon, and then bounce back in a show of resilience and strength.
One is speaking of a round or two of healthy profit booking as being correction and consolidation, which would allow more players to come in on the rally on its onwards journey. It is quite obvious, unless things take a sharp u-turn, that the liquidity which had vapourised recently is creeping back. There has been unambiguous buying support at every dip, and no dip has turned into a panic slide. The testing of, and finding support at lower levels would add to the confidence of a large number of players who are still nursing their wounds and fears. If the current pullback should be qualified as the resumption of the longer time rally, it can only do so in a secular and broad based manner. The memories should be raw still, of where a three-legged race really ends up.
And the above is related to the second point further above of the failed attempt at 2532 on Friday, in that we dont want to blithely test higher levels and react sharply there as seen then. On Friday a sense of edginess was clearly creeping in at the 2630 off levels where a prolonged tussle happened quite early in the session. Later in the day another feeble attempt or two caused the sharp reaction and the slide. 2635 is an important level to take and sustain but failing at these high levels will only harm the cause.
For this reason its important to go back a few notches and build up strength there.
The all time high weekly close mustnt be squandered.
The outlook remains positive as the Nifty is trading well above some crucial resistance levels and the momentum to the up seems firm. Choppiness and volatility would increase over the next few days approaching the F&O expiry. Should the trend and momentum continue to look good it may be a good idea to loosen some stop loss triggers cautiously on good momentum positions.
The levels, 2609 is an important number. 2601 and 2594 are crucial to protect 2584 the Fibanocci mark.
To the up, past 2625, 2633 has been unsuccessfully attempted and above this 2641 and 2649 are the range.