Markets At Fresh Record High; Nifty Closes Above 9650
MARKET OUTLOOK – 05 JUNE 2017
Markets At Fresh Record High; Nifty Closes Above 9650, Four Days Of Narrow Intraday Ranges Suggest Uncertainty And Consolidation; Getting Ready For Big Move – Direction Could Be Up Or Down.
NIFTY: The Markets are in a narrow range. This is not unusual. Markets will go through periods of expansion and contraction. In past four weeks, the Nifty has seen two trending moves – first from 9275 to 9530, then from 9375 to 9635. Both these moves are expansions from narrow ranges.
Now, in last four days, Nifty has made NR7 pattern three times including today. The weekly range in Nifty was just 135 points. Moreover, that range gets narrower in past four days that restrict to less than 100 points.
After contraction, there is a strong chance that the Nifty will again expand from this range. The range boundaries, as of now, seem to be 9680 as resistance and 9500 as support.
Nifty’s trend for both the short and intermediate term is still up so chances are that Nifty will again break this narrow range on the upside but as traders we don’t pre‐ empt any moves of the market and wait patiently for the market itself to give way on either side of this range. As markets go into choppy territory, trading in the indices is likely to become less rewarding. We continue to suggest remaining as day traders.
BANK NIFTY: Bank Nifty had a narrow range day but again with a neutral bias; prices opened with a gap up above 23400 and made a high above 23450. Index went through a dip that pushed prices to intraday low at 23308. Eventually index managed to close above yesterday’s close at 23362.75 with a gain of nearly 50 points.
On the daily charts, Bank Nifty is still trading inside 23000‐23500 from last six days. A decisive breakout from this range would be a next trading opportunity for swing traders. Both PVT and PSU Banks close with minor gains.
Trend is up and the index is trading in the upper hand of a range; so possibility of upside breakout is higher. However, positional traders should wait for a close above 23500 to confirm a breakout for a buying opportunity.
Even so, intraday traders can continue to initiate long positions on dips and consolidation patterns as suggested before. Avoid taking short positions.
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