Finally some relief on the street, likely to extend further: Angel Broking
“Yesterday, our markets defending the key support level of 10200 on a closing basis was certainly a remarkable achievement for our markets. It was clearly an indication that the sellers have exhausted and they do not have further strength to react to the global hiccups. Hence, we had a gap up opening today with a good bump up and in fact, the momentum accelerated as the day progressed. In the course of action, we are back to Wednesday’s highs by concluding the week on a cheerful note.
Finally, the recent losing streak came to an end as we not only managed to defend the critical support level of 10200 but also ended the week with a good hope of further recovery in the forthcoming week. Last week, we had highlighted few notable observations and all those key technical evidences have proved their significance. Despite unfavorable global cues, our markets showed tremendous resilience after correcting 78.6% of the entire up move from 9951.90 to 11760.20. Also, this key support zone coincided with the weekly 89 EMA and thus, the relief was very much on cards. Now, the question is, are we done with the correction or this is just a temporary relief rally? In our sense, it would be too early to judge this as a completion of the corrective phase. But, one thing we are convinced with is, we are heading for further bounce back in the coming week. As far as levels are concerned, we expect the natural extension to be around 10650 – 10750 and then one need to reassess the situation after meeting these probable junctions. On the downside, 10322 followed by 10187 would be seen as key support levels.
Momentum traders are advised to ride this relief move with strict stop losses. It would be a prudent strategy to focus on midcap universe, which has taken a u-turn from important supports and is now likely to witness further relief. But having said that; we would like to give a piece of advice to momentum traders, it’s better to adopt a stock centric approach and look to take timely profits off the table.”