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Trade Setup: Nifty50 to continue consolidation below 10,950 level

, ET CONTRIBUTORS|
Updated: Jan 20, 2019, 04.00 PM IST
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Trade Setup: Nifty50 to continue consolidation below 10,950 level
Monday will once again see the level of 10,950 and 11,060 acting as immediate resistance area.

Highlights

  • Nifty is expected to see a positive start to the trade.
  • Monday will once again see the level of 10,950 and 11,060 acting as immediate resistance area.
  • The daily MACD is bullish and it trades above its signal line.
  • The Relative Strength Index – RSI- on the daily chart is at 56.8394.
NEW DELHI: Indian stock market witnessed yet another rangebound session on Friday as the NSE benchmark Nifty remained under consolidation.

On expected lines the market did not take any directional call and oscillated in a defined range.

After opening stable and then losing ground in the first half of the trade, the index recovered to end on a flat note. The 50-share pack settled with a negligible gain of 1.75 points or 0.02 per cent.

MIlan Chart

As evident from the charts, Nifty remains in an ascending triangle formation. Though such formations are primarily of a bullish nature, a breakout will occur only after Nifty moves past the 10,950 level.

Nifty is expected to see a positive start on Monday, but the opening is likely to be around 10,950 level again.

Therefore, the opening level and the index’s behaviour vis-à-vis the 10,950 mark will be important to watch.

Monday will once again see the levels of 10,950 and 11,060 acting as immediate resistance area. Supports may come in at 10,850 and 10,805.

The Relative Strength Index (RSI) on the daily chart stood at 56.8394 and it remained neutral, showing no divergence against the price.

The daily MACD was bullish, as it traded above its signal line. A spinning top emerged, which showed the indecisive behaviour of market participants.

The pattern analysis on the daily chart showed that Nifty remained in an ascending triangle formation. A move beyond the 10,950 level will see the index taking a directional call.

Overall, if Nifty opens at or below the 10,950 mark, we might see consolidation for some time ahead.

However, shorts should be avoided as the internal structure of the market remains intact. There is a high probability that even if the market chose to consolidate in a range for some more time, it may eventually move past the 10,950 level to attempt a breakout.

(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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