Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,274.20569.4
Stock Analysis, IPO, Mutual Funds, Bonds & More

Trade setup: Nifty50 structurally weak, needs to top 10,800 level

The daily RSI stood at 31.78 and showed a bullish divergence against the price.

, ET CONTRIBUTORS|
Aug 22, 2019, 08.58 PM IST
0Comments
Stock12-Getty-1200
It was a terrible Thursday for the domestic stock market as it took a severe beating to end with a deep cut. With technical structure staying week, Nifty saw selling pressure at higher levels and ended 177.35 points or 1.62 per cent lower at 10,741.35.

The volatility during the day was also due to weekly expiry-led adjustments. Thursday’s session has inflicted considerable incremental damage on the charts. The decline has brought Nifty’s resistance points much lower from the 200-DMA to around the 11,000 level, and this has resulted in shifting of the base. In the event of any technical bounce, these levels will act as stiff resistance points.

Nifty has mildly breached the minor double bottom support of 10,800. It would be key for the headline index to crawl above this level for a technical pullback. Friday’s session is likely to see a tentative start with 10,800 and 10,910 levels acting as resistance points. Supports may come in at 10,700 and 10,630.

The daily RSI stood at 31.78 and showed a bullish divergence against the price. Nifty formed a 14-period low while the RSI did not do so, resulting in a bullish divergence against the price. The daily MACD continued to stay bearish while trading above its signal line.

1

The pattern analysis showed that the market has resumed its downtrend after it breached the neckline of the rounding top and pulled back only to halt at the 200-DMA.

We suggest traders to stay away from fresh exposures as Nifty is very near to the oversold levels. However, it also remains structurally bearish.

The possibilities of a technical bounce cannot be ruled out, but all such moves are set to meet with profit taking bouts at higher levels. A very cautious view is advised for the day.

(Milan Vaishnav, CMT, MSTA is a 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.)

Also Read

Trade setup: Nifty is structurally weak, but may see a technical pullback

Trade setup: Any Nifty pullback to remain limited; stay cautious

Trade setup: Nifty to stay muted, avoid aggressive bets for now

Trade setup: It was short covering on Monday; Nifty not out of the woods

Trade setup: Nifty50 needs to retake 10,800 level to stabilise

Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service