Nifty headed towards 5600+

Bottom Line: Indian markets managed to close strong despite poor IIP data. Positive reaction to bad news indicates inherent strength!

Nifty Daily chart:

   

Nifty 60 mins chart:

Wave Analysis:

Nifty continued to show strength despite poor IIP data that was published yesterday. Positive reaction to bad news indicates inherent strength.

As shown on daily chart, Nifty has managed to give a close above the downward sloping trend channel since February 2012. This further provides positive confirmation that Indian markets are headed towards 5700 levels we have been talking about for sometime.

The medium term positivity should remain as long as prices do not retrace the up move from 4780 to current levels in faster time. The current up trend is now 6 days old and index has broken the 3 to 4 days reversal pattern seen in the correction from February 2012.

Nifty 200 days moving average comes near 5100 and prices have managed to close above it.

The shorter time scale chart is not showing any divergence as yet and there is no sign of reversal for now. We will not be surprised to see this trend goes up without halting at any resistance levels between 5120 - 5200 since impulsive waves can sometimes be very violent. Also as we always mention important resistance or support levels are usually taken out in gapping action.

Existing long positions can now trail their stops towards 5030 and it will now be very well in the money.

In short, the trend continues to be firmly up as long as 5030 is intact on downside. Any break below this will indicate correction of the up move from 4780 to 5125 has started. However the bigger trend remains positive and any dips shall be used as buying opportunity.