Weekly Technical Analysis

Nifty — The index saw a breakout from its consolidation band and registered handsome gains during the last week’s trading. It closed on a negative note on the opening session of the week after which it saw a sharp rally for the remaning part of the week. It ended the week with gains of 320 points.

Momentum Oscillators — On the daily chart, MACD is in buy mode. RSI (14) – Relative Strength Index is exhibiting a reading of 76.79 (a reading above 70 signifies overbought). Stochastic (5, 3) is in overbought zone but in buy mode.

Momentum oscillators suggest the index can rise furthur from current levels.

Moving Averages — The 50 dma = 4440, 20 dma = 4511, 10 dma = 4591. The index is trading above the averages, which should be considered positive.

Support — The index has support around 4721 (low of 20 September 2007) and 4648 (Breakout level- Previous high [24 July 2007]). Intra-week declines should find support around these levels. A daily close below 4721 can see the index consolidation around 4700 levels.

Higher Levels — The index can test higher levels around 4980.The level of 4980 is the projection level on the upper end of the trendline. (Figure 3)

Conclusion — Stay focused on the upside with support around 4721 on a daily closing basis.