Wkly Tech Analysis: Nifty likely to test 5,389 soon

The markets exhibiting sideways movement ended with marginal losses amid the backdrop of weak global markets, especially the US markets. Slower IIP growth data coupled with fear of a likely interest rate rise during the week are factors that would weigh on investors sentiment.

The benchmark BSE index, the Sensex, moved in a fairly narrow band of 350-odd points. The index touched a high of 18,546, and then slipped to a low of 18,183. It finally settled with a loss of 0.6 per cent (108 points) at 18,269.

The weekly chart indicates support for the Sensex around 18,130-18,045, below which the index may slide to 17,940-17,600. On the upper end, the index is likely to face resistance around 18,400.

Last week, the NSE Nifty touched a high of 5,570, and then dropped to a low of 5,457, down 113 points from the week’s high. The index finally ended the week with a marginal loss of 0.6 per cent at 5,586.

The monthly Fibonacci chart indicates the Nifty has broken its S1 (Support 1), and is likely to test 5,389 soon. Deeper lower, the index has support around 5,335-5,285. A close below 5,460 will re-confirm the above bearish stance. On the other hand, the index needs to close above 5,570 in order to reverse the negativities.

Slightly long-term picture indicates a close below 5,460 could open the doors for a likely drop to 5,200-odd levels. Hence, one would be advised to exercise extreme caution in the market at current levels.

The weekly charts indicate the index has failed to clear the 5,560 hurdle for the second straight week. The momentum indicators — MACD (Moving Average Convergence-Divergence) and Stochastic Slow are both indicating further weakness for the markets. The lower end of the Bollinger Band on the weekly chart coincides with quarterly Fibonacci-based support around 5,200. Hence, one can look out for a considerable buying support around that level.