The Nifty started the week on a subdued note tracking weak Asian cues and subsequently drifted down

The Nifty started the week on a subdued note tracking weak Asian cues and subsequently drifted downward as an intraday pullback was short lived. The daily price action formed a bear candle carrying a lower high-low, indicating extended breather after past four week’s 9% rally

The formation of lower high-low on the weekly chart signifies a pause in upward momentum amid overbought conditions. Going ahead, we expect the Nifty to undergo a healthy consolidation, which will help to cool off overbought conditions and form a higher base above the key support of 17800, which will eventually pave the way to challenge lifetime highs of 18600 in coming weeks as the broader structure remains strong. Thus, an extended breather from here on should be capitalised on as an incremental buying opportunity. Our positive stance is further validated by following observations

Nifty Bank: 42346

The daily price action formed a high wave candle with a small real body and shadows in either direction signalling continuation of the consolidation after strong up move of more than 13 % in the last seven weeks

We expect the index to undergo healthy consolidation and form a higher base above the breakout area of 41500 after the recent strong up move which has led to weekly stochastic in overbought zone (91 ) . We believe dips should be used as an incremental buying opportunity for up move towards 43500 levels in the coming weeks being the 138 . 2 % external retracement of the recent breather (41840 - 37386 )