Technical Analysis

Nifty 50 May Futures (16,330): Go long now and at 16,270

Gurumurthy K |BL Research Bureau | | Updated on: May 18, 2022

Traders can go long at current levels and accumulate on dips at 16,270. Keep the stop-loss at 16,230.

Sensex and Nifty 50 are managing to hold on to their gains made yesterday. Nifty has risen well above 16,100 and can now head up towards 16,400 as mentioned yesterday.

Sensex, on the other hand, can test 55,000 on the upside. But thereafter will the indices continue to rise further or not will be important to be seen.  

Inability to breach 16,400 and a subsequent pull-back from there could bring back the selling pressure on the index. We will have to wait and watch.

Asians stocks are trading mixed. Nikkei 225 (26,823, up 0.62 per cent) is up, while Kospi (2,620) is flat. Shanghai Composite (3,082) and Hang Seng (20,471) are down by 0.37 and 0.64 per cent respectively.

In the US, the Dow Jones Industrial Average (32,654) rose sharply by 1.34 per cent. Though there is room to rise, important resistance is at 33,000 which will need a close watch. Dow has to rise past 33,000 to become more bullish. A reversal from 33,000 can trigger a fresh fall. As such price action in the Dow around 33,000 will need a close watch.

Futures

The Nifty 50 May (16,330) Futures contract has risen above 16,300 and is up 0.45 per cent. Support is at 16,250 now. If the contract sustains above 16,250, a rise to 16,420 and even 16,500 is possible in the near-term.

Traders can go long at current levels and accumulate on dips at 16,270. Keep the stop-loss at 16,230. Trail the stop-loss up to 16,370 as soon as the contract touches 16,410. Move the stop-loss further up to 16,410 as soon as the contract touches 16,440.  Book profits at 16,460.

The broad region between 16,400 and 16,500 is a strong resistance zone. As such trader will have to exit the longs as mentioned above. We will wait and watch if the contract is reversing lower or not and then take further trades going forward accordingly.

Trading strategy

Go long now and at 16,270. Keep the stop-loss at 16,230 for the target of 16,460. Trail the stop-loss up to 16,370 as soon as the contract touches 16,410. Move the stop-loss further up to 16,410 as soon as the contract touches 16,440.  

Supports: 16,250 and 16,000

Resistances: 16,420 and 16,500

Published on May 18, 2022
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