The markets had a stronger-than-expected as the NIFTY went close to its crucial resistance area and ended the day with a decent gain. The markets saw a positive start to the day; the NIFTY opened near its crucial 15900-15950 area and spent the entire day in a very limited range. Although the Index maintained its gains throughout the session, the trajectory remained sideways for the entire session. The NIFTY traded in a very narrow and defined 55-point range. However, the benchmark index held on to its gains and close with a net gain of 122.10 points (+0.77%).
Tuesday’s session can turn out to be a crucial session for the markets. The NIFTY is very close to its very important and critical resistance area of 15900-15950. The opening of the markets and the NIFTY’s behavior against this zone of 15900-15950 will be extremely important to decide the trend not only for tomorrow but also for the immediate short-term. The NIFTY is still below this zone, and it will have to move past this resistance area convincingly to have any meaningful move on the upside. Unless this happens, it will continue to remain in the present consolidation zone.
Tuesday is likely to see the levels of 15900 and 15985 acting as crucial resistance areas. The supports come in at 15800 and 15725 levels.
The Relative Strength Index (RSI) on the daily chart is 56.98; it has marked a new 14-period high which is bullish. The RSI is neutral and does not show any divergence against the price. The daily MACD stays bearish and below the signal line.
The pattern analysis continues to show the Index resisting hard near the 15900-15950 area. Over the past more than eight weeks, the NIFTY has been under a very defined and broad consolidation.
Though the markets remain overextended on the long-term weekly and monthly charts, it is showing great strength and no inclination to correct. However, at the cost of being repetitive, we reiterate that any such potential breakout should not be preempted or taken for granted. It would be prudent to patiently wait for the breakout to actually occur followed by a confirmation of such move. Until this happens, it is suggested to continue approaching the markets in a defensive way with a stock-specific approach.
This was first published by The Economic Times.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)
