Analysts said the index could be in for some consolidation, and believe Nifty testing of the 14,400-14,367 range could put an end to the ongoing strong momentum.
Wednesday’s indecisive formation was accompanied by a negative advance-decline ratio that remained strongly in favour of the bears, said Mazhar Mohammad of Chartviewindia.in, who said, it might be the harbinger of weakness in near future.
“A critical short-term support is placed in the bullish gap zone area between 14,383 and 14,367 levels, which the bulls need to defend to retain an optimistic outlook. A close below the 14,367 level can be an initial sign of short-term weakness towards the 13,950 level, which can be considered as trend reversal,” Mohammad said.
Aditya Agarwala, Senior Technical Analyst at YES Securities, said the index is ruling at overbought levels, following the relentless rally in the past three trading weeks.
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“A move below 14,400 level can lead to fresh bouts of profit taking on Nifty50, dragging the index to the 14,300-14,200 zone. On the flip side, a sustained trade beyond the 14,600 level will extend the gains to 14,800 level. On the weekly time frame chart, RSI is trading above 80 level and the highest it has reached is between 87-89 in December 2003, which was followed by a correction,” Agarwala said.
Gaurav Ratnaparkhi of Sharekhan believes the index can get into a brief consolidation, before heading higher. “Nifty consolidation can take place in the 14,400-14,600 range and it will eye the 15,000 level once Wednesday’s high of 14,653 is breached,” he said.