Nifty Technical Analysis: holding 50-hour EMA

India’s Nifty 50 is trading in the red, but is defending the 50-hour EMA 10,445.

The bullish hammer reversal confirmed on Friday indicates scope for a corrective rally toward 10,700-10,800 in the next few days.

Therefore, I would be a buyer on the dips. The bullish outlook would be invalidated if the index closes today below the downward slopingĀ  5-day EMA.

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Goldman Sachs – Bullish invalidation below 221 levels

Positive RSI divergence + bullish symmetrical triangle breakout signals potential for rally to 245-250 levels. The second quarter revenue has failed to meet expectations…EPS adjusted came-in at $3.95 vs. $3.51 expected.

Better-than-expected EPS is good news. Stay on the long side as long as the prices stay above 221 levels.

Daily chart

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21,545 is the key level on the Dow index

Daily chart

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The trend line has come to the rescue again… but the RSI is overbought and has been so for the major part of last 8 months… It was last overbought in 2013.

Markets are cheering Yellen’s slightly dovish take on interest rates, however, once again what is being ignored is the reverse QE = Balance Sheet runoff.

Indecision written all over Dow Jones chart

Weekly chart – Multiple candles with long upper/lower shadows signals indecision at record highs. The rising trend line coming from Feb 2016 low & June 2016 low is seen offering support at 21,310-21,300 levels. If breached, it would signal the index has topped out at least for the short-term.

However, don’t bet on the short side if the index breaches the rising trend line via sideways action…

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S&P 500 – Trend line hurdle caps gains

Deutsche Bank described today’s US NFP and wage growth numbers as a ‘classic risk-on’ data, however the trend line hurdle is capping gains. Take note of the fact that the index closed below the trend line yesterday. I would go short on the index if the failure at the trend line is followed by a break below the session low of 2407.

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