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Trade setup: Nifty50 likely to fall towards 20-DMA at 11,751 level

The highest Put open interest, which was earlier at 11,900, has shifted to 11,800 strike.

, ET CONTRIBUTORS|
Nov 13, 2019, 08.57 PM IST
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The 12,000-12,050 zone has now become an intermediate top for the market.
NSE Nifty was back in the red as short covering failed to boost the stock market on Wednesday. The index saw a positive opening and traded modestly positive in a capped range before gradually slipping into negative territory.

After trading with modest losses in the afternoon session, the weakness intensified in late trade. The index finally ended with a loss of 73 points or 0.61 per cent at 11,840.45.

The expiry of weekly options will dominate the upcoming session. The highest Put open interest, which was earlier at 11,900, has shifted to 11,800 strike.

The strike price of 11,900 now has the second-highest Call open interest buildup. The shift indicates the support has moved from 11,900 to 11,800 as of now, unless a tactical shift occurs again.

The 12,000-12,050 zone has now become an intermediate top for the market in the short term.

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We expect a quiet start to the session on Thursday. There are chances that the market may initially trade with modest gains, but all upmoves, will continue to find stiff resistance at 11,890 and 11,950 levels. Supports may come in at 11,800 and 11,710.

The Relative Strenght Index (RSI) on the daily chart stood at 59.57 and stayed neutral, showing no divergence against the price. The daily MACD has shown a negative crossover and is bearish, trading below its signal line. A black body emerged on the candles.

As per pattern analysis Nifty has stalled its rally near the 12,000-12,050 zone after breaking above the 11,750 level. This makes the zone an intermediate top for the market.

There are higher chances that we may see the index moving towards its short-term 20-DMA, which is at 11,751.

Some shorts positions have got added into the system, which is evident from the addition of open interest along with the decline and shrinkage of the futures premium.

However, these figures remain less significant as of now, and we may see Nifty continues to trade with a corrective bias. There are chances of some positive trade initially.

However, we would recommend traders to use upmoves to protect profits. Given weekly options expiry, volatility can increase. A cautious view 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.)

Also Read

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Trade setup: Nifty may continue to consolidate; 12,103 level key

Trade setup: Outlook positive as long as Nifty stays above 11,974

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