The short term range
The index can move out of overbought territory without the price falling but consolidating sideways instead. At the moment this does appear to be happening and we identify the short term price consolidation between levels 49420 and 49965.
Upside breakout scenario
A close above 49965 would consider an upside breakout and possible long entry opportunity with a target of around 500 points higher (equal to the height of the current consolidation). In this situation traders might consider a stop loss of around 250points, which is half the distance of the upside move expected.
Downside breakout scenario
A close below 49420 might consider a downside breakout scenario. Should this scenario occur this could bring the price towards trend line or horizontal support (48050 to 48260). Trading a downside breakout here is against the trend and would carry a high degree of risk. Traders who take this contrarian approach might consider using a close above the high at 49965 as the failure level whilst targeting the aforementioned support levels.
However, we do still prefer, should the downside breakout occur, waiting for weakness to play out to look for long entry rather than trading short against the longer term uptrend.