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Trade setup: Nifty likely to see breakout beyond 10,950 level

Friday will see the level of 10,950 and 11,030 acting as immediate resistance area.

, ET CONTRIBUTORS|
Jan 17, 2019, 09.08 PM IST
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Friday will see the level of 10,950 and 11,030 acting as immediate resistance area.
In an extremely volatile session on Thursday, the NSE benchmark Nifty recovered from the day’s low to end with modest gains. The positive start saw the Nifty opening exactly near its resistance area of 10,900-10,950 zone.

Thereafter, the index pared all its gains and lost over 80 points from the day’s high. Nifty then saw itself taking support near its 100-DMA and made a sharp rebound to finally settled with a gain of 14.90 points or 0.14 per c ent.

The last hour rebound came on the back of short covering, which took place near the important support levels.

We once again expect a positive start to the day, and see Nifty looking to move past the important 10,900-10,950 resistance area, which is critical for the market, as it tries to achieve a breakout.

As of now, Nifty remains in the ascending triangle formation while consolidating in a defined range.

Friday will see the level of 10,950 and 11,030 acting as immediate resistance, while supports may come in at 10,840 and 10,810.

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The Relative Strength Index (RSI) on the daily chart stood at 56.7455 and it remained neutral, showing no divergence against the price. The daily MACD was bullish and traded above its signal line.

A candle with a long lower shadow occurred. It has emerged during the period of consolidation and does not hold any major significance in the present context.

The pattern analysis of the charts show that Nifty remains in the ascending triangle formation. It has consistently taken support near its 100 and 200 DMAs, which also happen to be important pattern supports.

While trading near the upper end of the present area formation, Nifty awaits a breakout. However, as mentioned in previous notes, moving past effectively beyond the 10,950 level will be important for the index to achieve a sustainable breakout.

We expect such attempts to move higher to continue, but in the same breadth, unless 10,950 is taken out, we will see market remaining volatile and prone to profit taking bouts at higher levels.

While maintaining a stock specific view, a cautiously positive approach is advised for the day.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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