Nifty may head towards its breakout level of 10,985 on positive global cues

Buoyed by Federal Reserve Chair Jerome Powell's message that the Fed will be flexible on monetary policy and it was in no hurry to raise interest rates, the US stocks ended with sharp gains on Friday. The Dow Jones soared 746 points or 3.29 per cent to 23,433 while the tech-heavy Nasdaq climbed 4.26 per cent to end at 6,738. In Europe, the headline indices FTSE 100 jumped 2.16 per cent and DAX closed 3.37 per cent higher. At 7.35 am, the SGX Nifty, an early indicator of Nifty50 performance, traded 102 points or 1 per cent higher at 10,881, suggesting a gap up start for the domestic market back home.

The resistance for Nifty50 is located at 10,985 - its previous high, as per the daily chart. The BSE Sensex scaled above the breakout level of 36,450 in December 2018; however, it witnessed lack of follow-up buying. The positive global cues suggest the domestic indices may head towards these resistance levels.

Last week saw benchmark indices hovering around their major moving averages on the daily chart. Both the Nifty and Sensex faced resistance around their 100-day moving averages (DMAs) of 10,900 and 36,285, respectively, hitting a weekly high of 10,923 and 36,285.

On the downside, support came in at 50-DMA of 10,646 for Nifty and 35,403 for Sensex, with a low of 10,628 and 35,382. On Monday, the indices are likely to head towards their breakout levels of 10,985 and 36,550 respectively, charts suggest.

Among other indices, Nifty Bank is indicating a strong trend as it is trading above all the moving averages – 50-DMA, 100-DMA and 200-DMA. The index not only crossed its two-week high of 27,369, but also closed above it at 27,392 in one of the sessions last week. Any move above 27,400 may see strong buying, the chart suggests.