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Trade setup: Nifty50 may try to scale lifetime high on Friday

The RSI on the daily chart stood at 72.53 level, showing no divergence against the price.

, ET CONTRIBUTORS|
Updated: Nov 07, 2019, 09.49 PM IST
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Friday’s session may see a flat to a modestly positive start with 12,030 and 12,105 levels acting as resistance.
The domestic stock market continued with its winning momentum on Thursday, as NSE Nifty recovered from early losses in the second half of the session. The index finally managed to close above the 12,000 level, as it ended with a gain of 46 points or 0.38 per cent at 12,012.05. The expiry of weekly options dominated the session on Thursday.

Nifty has consistently added net open interest while registering modest gains. The addition of open interest along with the gains reflects long positions builtup and a buoyant undercurrent. This may help Nifty in testing previous highs. However, the index trades in overbought territory, and because of this, the upmoves should be chased very cautiously.

Friday’s session may see a flat to a modestly positive start with 12,030 and 12,105 levels acting as resistance. Supports may come in lower at 11,910 and 11,850.

The Relative Strength Index (RSI) on the daily chart stood at 72.53 and stayed neutral, showing no divergence against the price. The RSI traded in overbought territory. The daily MACD remained bullish and traded above its signal line.

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A hanging man was formed on the candles. This formation with a long lower shadow may potentially stall any upmove. However, this would need confirmation on the next trading day.

The pattern analysis of the daily chart showed that Nifty has pushed higher after it broke out above the 11,700-11,750 zone. The index is now just a whisker away from its lifetime highs, and appears to be making incremental highs without any significant retracement.

Nifty attempting to test its lifetime high on Friday cannot be ruled out. This being said, the daily charts also have a lots of signals that point towards likely stalling of the rally near the current levels.

We recommend traders to avoid significant short positions and chase momentum carefully. A cautiously positive approach is advised for the day.

(Milan Vaishnav, CMT, MSTA, is a Consultant Technical Analyst and founder of 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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