Bulls defended the territory, better to take one step at a time: Angel Broking
Weekly Market Wrap Up by Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking)
"The previous week's tail end surge was followed by a good start on Monday; but the overall trading range was extremely narrow. We continued upward momentum on the following day as well, in fact on Wednesday, markets started with a bang at three months high. But all of a sudden, markets took a nosedive from higher levels. This turned out to be a profit booking after a consistent rally of nearly 800 points in a span of 5-6 days. Last couple of days' price action was more of a range bound action with a positive bias. Eventually, Nifty ended the week by adding over a percent from the previous weekly close.
During the midst of the week, we witnessed a reality check at 10500 and fortunately, the profit booking did not extend too long. In fact, prior to Friday's session, we were hoping Nifty not to close below 10300-10250 levels. Because this would have resulted in a formation of 'Shooting Star' pattern on the weekly chart that too near '200-SMA' on the weekly chart. However, due to today's close, we can see a formation of 'Spinning Top' pattern and this generally indicates neutral bias i.e. neither the bulls dominated, nor the bears had the upper hand. Ideally a close beyond 10500-10550 would have suggested a stronger closer but nevertheless bulls somehow managed to defend their territory. Now, this week's low of 10194 would now be seen as a key support and as long as we are above it, there is no reason to worry. So practically speaking, traders are advised to trail stop losses higher at this level and a breach of this would result in a strong bout of profit booking in the market.
On the flipside, we expect the rally to continue and a move beyond 10500 would certainly unfold the next leg towards 10700 - 10850 levels. Since, there is a cluster of resistance at every 200 points up move from hereon, traders are advised to take one step at a time and should ideally avoid carrying aggressive bets overnight."