The upper end of a rising channel, and the hourly upper Bollinger Band, are also present near 18,000, said Gaurav Ratnaparkhi of Sharekhan.
“Thus, 18,000 is a key level where the bulls can take a breather. However, if the bulls manage to push the Nifty50 beyond 18,000, the 78.6 per cent retracement of the entire October-December decline, i.e. 18,140, will be the subsequent level to watch out for. On the other hand, a dip towards 17,700, to test the lower channel line and the key hourly moving averages, is plausible before further extension on the upside,” Ratnaparkhi added.
For the day, the index closed at 17,925.25, up 120 points or 0.67 per cent.
Some indicators on the short term charts have reached overbought levels, hinting at caution. The index must sustain above 17,748 level as a breach of this can attract some selling pressure on an intraday basis, said Mazhar Mohammad of Chartviewindia.in.
“However, on sustaining above this level, strength may get extended towards the 18,135 levels, which is the ideal target for this leg of up move. Considering the weekly expiry and overbought nature of short-term indicators, fresh, long positions may not be advisable for traders at these levels,” Mohammad said.
Independent Analyst Manish Shah said the momentum indicator 10-day ROC registered a new high not seen since June. A shift in momentum precedes the shift in trend.
MACD has moved above the signal line and remains in a buy mode, Shah added.
“Nifty50 should rally towards 18,150 and then see a corrective decline. Buying on declines should be the preferred strategy,” Shah said.
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