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Trade setup: Nifty50 looks all set to stage a decisive breakout

Wednesday is likely to see levels of 10,900 and 10,950 acting as immediate resistance area.

, ET CONTRIBUTORS|
Jan 15, 2019, 08.55 PM IST
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Wednesday is likely to see levels of 10,900 and 10,950 acting as immediate resistance area.
The NSE benchmark Nifty on Tuesday leapfrogged from the support of 50-DMA and ended the session with a decent gain of 149.20 points or 1.39 per cent. In the process, the index moved past the 200-DMA and 100-DMA.

Wednesday is likely to see a stable opening once again and we expect some follow-up rally to continue in the morning trade. Taking support at the 50-DMA and moving past 200 and 100 DMAs are technically important events. However, it is important to note that the market still remain in the ascending triangle pattern and awaits a breakout.

If we witness a follow through upmove, it will then take the Nifty to the important 10,900-10,950 resistance zone. Despite a strong upmove on Tuesday, the Nifty is still within the area formation and awaits a breakout. Wednesday is likely to see the levels of 10,900 and 10,950 acting as immediate resistance area. Supports may come in at 10,840 and 10,780 areas.

The Relative Strength Index (RSI) on the daily chart stood at 55.8206 and it remained neutral, showing no divergence against the price.

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The daily MACD remained bearish and traded below its signal line. A big white body emerged on the candles. Since this has emerged near the support area of 50-DMA, it has lent credibility to this support area.

Overall, Nifty has shown positive technical developments by taking support at its 50-DMA and then moving past the 200 and 100 DMAs. However, it still remains in the ascending triangle pattern. It will now face the important 10,900-10,950 zone and a breakout will occur only after the Nifty moves past this critical resistance zone.

The F&O data has shows sharp addition in open interest along with the upmove and we can fairly expect a breakout in the coming days. However, until this happens, some consolidation once again at higher levels cannot be ruled out. Broadly speaking, positive outlook 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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