Tech View: Nifty RSI hints at overbought zone. What traders should do next week
Nifty on Friday ended 274 points higher to new lifetime high highs and formed a green candle on the daily and weekly charts.
Further upsides are likely once the immediate resistance of 2,1492 is taken out. Caution is however warranted for the near term as the 14-day RSI at 84.93 is in overbought territory. Thus, any short-term corrections can be utilized to buy into quality stocks, said Subash Gangadharan, senior technical and derivative analyst at HDFC Securities.
The 14-week RSI is at 75.87, which implies that it is not extremely overbought and there is scope for more upsides in the intermediate term.
Option data reveal heavy writing in 21,100 PE and 21,200 PE and addition in 21,400 CE and 21,500 CE.
What should traders do? Here’s what analysts said:
Rupak De, LKP Securities
The prevailing sentiment appears strongly in favour of the bulls, as indicated by the absence of any reversal signals on the technical charts. Resistance is observed at 21,500, while a potential further rally in the Nifty could occur upon breaching this level. Support is currently positioned at 21,300.
Jatin Gedia, Sharekhan
On the daily charts we can observe that the Nifty has been stretching higher towards 21,500. The rally has been perpendicular in nature and still we see no signs of weakness on the price front. The daily momentum indicator has a positive crossover. However, it has not registered a new high indicating that a negative divergence is in process. However, until we get signs of weakness on the price front we shall continue to ride the up move. On the upside, the short term target is placed at 21500.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts
