Stock picks of the day: Cut shorts and go long in Nifty; 11,142 critical for bulls

For the last 5 consecutive weeks, the Nifty has been consolidating in the weekly closing range of 10,829 to 11,109. The Nifty has been taking support around its 100-week EMA and has managed to sustain above that on a weekly basis.

At present, 100-week EMA is placed at 10,787 and unless that is breached, the view is towards the upside in the Nifty. On the upside, 11,181 the higher band of the consolidation would remain strong resistance for the index.

As per the Dow Theory, bullish trend reversal gets confirmed when underlying makes higher bottom followed by a higher top. Currently, the higher top is yet to be made in Nifty, which is placed at 11,142.

A level above 11,142 would also confirm bullish inverse head and shoulder breakout on the Nifty daily charts. The approximate target, in that case, would come at 11,600 levels.

On the weekly charts ending 6th Sep 2019, the Nifty formed a “Dragon Fly Doji” kind of pattern, which indicates chances of bullish trend reversal.