Sensex recovered from 19,101 last week bodes well for the short-term prospects. The index has immediate support at 19,205 and 19,039. Presence of 200-day moving average at 19,070 also lends support to the zone between 19,000 and 19,200. If the Sensex manages to hold above this support band, it can attempt to move higher to 20,348 or 21,120 in the ensuing months.
However the strong resistance in the band between 19,650 and 19,840 can not be taken lightly either. Since this occurs at 61.8 per cent retracement of the prior down-move, any minor pullback will have trouble crossing over it. Medium-term targets on inability to move above this resistance band remain at 17,761 and 16,495.
In other words, the medium-term trajectory of the index will be decided in the next couple of weeks and it will be difficult to form a view on the same as long as the index remains in the current trading band. Both bull as well as the bear camp has the chance to pull the index in their direction.
A strong start to the week can take the index higher to 19,730, 19,840 or 19,973. Approach near the psychological resistance at 20,000 could cause some profit-booking. Strong break above this resistance will take the index to 20,348.
Supports for the week ahead will be at 19,205 and 19,039. Short-term view will turn negative only if the index records a strong close below 19,000.
The Nifty (5,824.5) too was extremely volatile in the band between 5750 and 5950 last week. The index has not yet moved above the key medium-term resistance around 5,959. Those holding short positions can continue to do so as long as the index trades below this level.
Medium-term targets on a strong reversal from this zone stay at 5332 or 4954.
However the movement last week is encouraging from a short-term perspective.
Nifty halted its slide at 5,735 after retracing 35 per cent of the previous up-move.
Key short-term support for the index is at 5716. Presence of 200-DMA at 5725 also makes the zone between 5700 and 5750 very important from a near-term perspective. Fresh short positions are therefore advised only on a close below 5700.
However if the index manages to hold above 5700, there is the possibility of a break higher to 6103 or 6296 in the months ahead.
Nifty could stay volatile in the short-term. A positive start to the week can take the index higher to 5922 or 5994. Supports for the short-term would be at 5716, 5650 and 5580.
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