Trade setup: Nifty50 to face stiff resistance in 20-200 DMA zone
The RSI on the daily chart stood at 41.05 level, showing no divergence against the price.
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Despite intermittent pullbacks, the market is lacking strength and conviction to sustain at higher levels. The zone between 20-DMA and 200-DMA will continue to pose resistance to the market.
While expecting a quiet start to the trade on Wednesday, we expect 11,080 and 11,165 levels acting as resistance. Supports may come in at 10,980 and 10,935.
The relative strength index (RSI) on the daily chart stood at 41.05 and remained neutral, showing no divergence against the price.
The daily MACD continued to stay bullish and traded above its signal line. No significant formations are seen on the candles.
The pattern analysis shows that Nifty is trapped in a broad trading range after breaching the neckline of the rounding top formation. The break below the neckline formed a low near 10,780, and the pullback halted near the 200-DMA. A broad trading range has been created in this area.
We see the market trading in a broad range and not taking any directional call. Higher levels will see stiff overhead resistance and sustainability of the index at higher levels will be in question unless zone between 20-DMA and 200-DMA is taken out.
We recommend traders to maintain a modest exposure and avoid aggressive bets. Volatility is likely to increase over the coming days, and we reiterate maintaining a cautious view on the market.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at email@example.com)