Trade setup: Don’t chase any Nifty bounce blindly; stay stock specific
11,110 and 11,175 will provide immediate resistance. Supports comes in at 11,000 & 10,950
The attack on the facilities of Saudi Aramco and its likely impact on crude oil prices will invite some reaction from the equity market on Monday. Technically, Nifty continues to trade below critical resistance levels. All upmoves, if any, should not be chased blindly unless Nifty moves past its critical resistance zone at 11,120-11,200.
If the impact on crude price is digested, we may see some attempts by the market to go higher. However, the market remains vulnerable at higher levels. The 11,110 and 11,175 levels will act as immediate resistance while supports will come in at 11,000 and 10,950. The range is expected to remain wider than usual.
The Relative Strength Index (RSI) on the daily chart stands at 52.0383; it has marked a fresh 14-period high, which is a bullish signal. The RSI also shows a bullish divergence against the price. The MACD stays in continuing ‘buy’ mode as it trades above the signal line. No notable formations were observed on the candles.
Pattern analysis on the daily charts continued to show the index trading in a broad trading range after breaching the neckline of the rounding top formation. The index currently rules below the neckline resistance zone, but above the lower base that it has formed following a recent pullback.
Despite the recent pullback, Nifty is yet to show any final directional bias and continues to remain within a broad trading range. The index also rules below key resistance areas. While one must remain highly stock-specific in approach, a cautious view is advised for the day.
Milan Vaishnav, CMT, MSTA is a Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at email@example.com