Correction likely

The S&P CNX Nifty made a new top of 5,550 and closed at 5,528, while the Sensex closed at 18,419 after making new top at 18,844. Technical analysts have mixed views on the markets after a sharp correction on Friday. According to technical analyst Manas Jaiswal of Emkay Shares, the Nifty has made a bearish pattern on the daily charts and the RSI has given a sell signal with negative diversions.

Nifty may correct the recent rally from 5000 to 5549 and come down to 5339 and then 5275. The 5275 level is 50 per cent retracement level for the Nifty rally from 5,000 to 5,549. Any bounce back would be an opportunity to exit from long positions. For Monday, Nifty has resistance at 5493 and above that, 5549. There is support at 5402 and then 5339.

Technical analyst Kamalesh Langote of vfmdirect.com said that the divergence of relative strength index (RSI) indicates problems ahead. The divergence means higher tops and higher lows for benchmark indices and lower tops and higher highs for RSI due to the intra-day volatility. The RSI divergence leads to corrections in most cases, but this is unlikely to happen on Monday. The Nifty may scale to new highs before reacting to market forces.