The cash index traded higher on Friday, breaking above the upper bound of the triangle that was containing the price action since June 18th. What’s more, today, the index opened with a positive gap above the 7465 hurdle and continued to head north. In our view, the upside exit out of the triangle may have signaled the continuation of the prevailing short-term uptrend started on June 3rd, and thus, we would hold a positive stance for now.
At the time of writing, it seems that the bulls are heading towards the 7525 hurdle, marked fractionally below the high of April 23rd, the break of which could allow extensions towards the 7555 zone, near the peaks of September 27th and 28th, 2018. If the bulls are willing to continue pushing higher, then a break above 7555 could allow them to put the 7590 zone on their radars, a resistance defined by the inside swing low of August 28th, 2018.
Taking a look at our short-term oscillators, we see that the RSI broke above its 70 line and continues to point up, while the MACD lies above both its zero and trigger lines, pointing north as well. These indicators detect strong upside speed and support the case for this index to continue drifting higher for a while more.
On the downside, we would like to see a clear dip below 7370 before we start examining whether the near-term outlook has turned negative. Such a dip would confirm a forthcoming lower low on the 4-hour chart and could open the path towards the 7325 zone, which is marked by the low of June 17th and is also slightly above the low of June 14th. If there are no buyers at this support zone either, then a break lower could see scope for extensions towards the 7285 area, defined by the inside swing peak of June 6th.
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