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Friday Trade Setup: NIFTY's Price Action Against These Levels Crucial To Watch; Vigilant Protection Of Profits Advised

The markets on Thursday traded precisely on the expected lines as the weekly expiry of the options dominated the trend for the day. The 9000 levels had a maximum accumulation of the Call OI; this prevented the NIFTY from going beyond this point, more so in the second half of the trade. After witnessing a negative start to the day, the markets recovered from the morning low but did not see any runaway rise at any point in time during the day. While continuing to resist the key levels, the headline index ended with a net gain of 67.50 points (-0.76%).
 

The volatility cooled down considerably as the India Volatility Index, INDIAVIX, declined by 7.32% to 49.0950. The price action of the NIFTY against 9050-9100 will continue to remain critically important over the coming days. Any sustainable technical pullback would happen only if the index can move past and keep its head above this zone.

Friday is likely to see a tentative start to the day. The levels of 9050 and 9115 will act as immediate resistance points. The supports will come in at 8930 and 8850 levels. Any downside move is expected to make the trading range wider than usual over the coming days.
 
The Relative Strength Index (RSI) on the daily chart is 46.50; it stays neutral and does not show any divergence against the price. The RSI is also seen resisting to a falling trend line that is joining the indicator’s lower tops. The daily MACD is bullish and trades above its signal line. A white body appeared; apart from this, no other significant formations are seen on the candles.
 
The pattern analysis shows that currently, the NIFTY remains in an area formation, wherein it has attempted to mark a base for itself by making a higher bottom near the 8000 levels. Presently, the index has strong resistance in the 9050-9100 zone, and it will have to move past this area to continue with the technical pullback.
 
Unless the NIFTY moves past and sustains above the 9050-9100 levels, it will continue to remain vulnerable against profit-taking at higher levels. The index has made a higher bottom, but it is yet to break out of the current wide trading range. We recommend avoiding significant exposures on the long side unless the NIFTY moves past the mentioned zone convincingly. So long as the markets remain in the current trading range, profits on either side should be vigilantly protected.

Milan Vaishnav, CMT, MSTA,
Consulting Technical   Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK)  | (Research   Analyst, SEBI Reg. No. INH000003341)

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