How much higher can this rally go ? This is an important question for those (a) who remain short in some form or the other (b) who missed buying last week, and, (c) traders looking to exit their long positions.
Now, momentum has its own logic. Traders do not question why a move is coming. Their task is to identify the move, then go along with it. Currently, momentum favors the bulls. Therefore, the appraoch should be: we will remain buyers on dips while bullish momentum continues. We cannot predict the turning points in a market.
Traders with existing long positions should pay attention to signs of weakening momentum, spccially when such signs occur near resistance levels. The Nifty is now near the 3200 - 3300 resistance zone. As the Index comes close to this zone, traders should tighten their stops. I have a blog post which explains how you can actually tighten your stops.You can read it Here .