NIFTY IS TRADING IN THE OVER BOUGHT ZONE
Nifty started to trade in the green at the beginning of the last week. After opening at 5120, it continuously rose to make a high of 5302. Currently, it is trading in the overbought zone and a short term correction might be in the offing which might take it lower to 5180 followed by 5120. On the upside, a breach of 5330 would only open the gates for 5400.
With the F&O derivative expiry in this week , we may see some volatile sessions. A "Spinning Top" candlestick pattern on the Daily chart and short-term momentum oscillators in an overbought zone suggests a minor pull back of the preceding up move, which started from 4967 to 5302 levels. On the downside, the indices may test 5174 - 5135 levels. However, the intermediate trend remains up and continuation of higher top higher bottom formation on the Daily chart is there. On the upside, if the indices manage to trade and close above 5302 levels then Nifty is likely to test 5350 levels or even the recent 7th April 2010 highs of 5400 levels. Traders holding long positions can hold their long with trailing stoploss to 5050 levels and trade with positive bias as long as the markets hold 5050 levels.
For Monday: Go Long in Nifty with stoploss 5241; Watch IDFC (Accumulate around 165-168 with a view of one-two week for a target of 178-184, with stoploss of 159), Sunpharma, Aban Offshore, Century Textiles, Grasim and Adani Power.
