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Trade setup: Nifty needs to top 10,900-10,950 levels to stabilise

Thursday may see 10,900-10,950 zone acting as immediate resistance area.

Jan 23, 2019, 09.19 PM IST
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Thursday may see 10,900-10,950 zone acting as immediate resistance area.
Stock market on Wednesday saw a sharp sell-off in the last hour of trade and ended with a heavy loss of 92.25 points or 0.84 per cent. Despite trading flat for the major part of the session, the NSE benchmark Nifty briefly broke below the 200-DMA and converted an otherwise listless session into a disappointing one.

However, as of now, the index has managed to hold the support of its 200-DMA, which is at 10,832.

It is now important for Nifty to reverse Wednesday’s fall to again move towards the 10,950 mark. If this does not happen, there are theoretical possibilities of the present formation, which is otherwise bullish, losing its significance.

A stable start to the trade is expected and the levels of 10,832 and 10803 are expected to act as strong support at close as they are the 200 DMA and 100 DMA respectively.

Thursday may see 10,900 to 10,950 zone acting as immediate resistance area. Supports may come in at 10,800 and 10,765.

The Relative Strength Index (RSI) on the daily chart stood at 50.4955, as it stayed neutral, showing no divergence against the price. The daily MACD remained bullish while trading above its signal line.


A big black body emerged on the candles, and the emergence of such a candle has once again reinforced the credibility of the resistance zone of 10,900-10,950.

Nifty has remained in the ascending triangle formation, which is otherwise considered bullish. However, it had delayed its breakout despite making a few half-hearted attempts. In our previous note, we had mentioned about the possibility of this formation losing its significance if a breakout is not achieved.

The last hour sell-off can prove to be technically harmful if the market does not reverse its losses soon.

However, there is not any structural damage to Nifty, as it remained above the 200 DMA and 100 DMA levels at close.

We recommend approaching markets with great caution and avoiding any major directional positions. Dips may still be used to make select purchases while protecting profits at higher levels.

(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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