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Outlook For Friday: NIFTY Halts At Critical Level; Any Up Move Should Be Chased Only Through Such Stocks

The expiry of the weekly options kept the markets in a highly defined range. While staying in a controlled range, the markets extended its up move while ending the day with modest gains. The NIFTY saw a positive and stable opening to the day and remained in a rising upward trajectory in the first half of the session. However, the heavy writing on the Call and the Put in the 9100 and 9000 strikes ultimately kept the markets within this range. The NIFTY came off from its highs in the second half of the trade and closed with a gain of 39.70 points (+0.44%).
 

The NIFTY has halted near the 50-DMA, which presently stands at 9112. The 50-DMA may act as resistance on a closing basis; the behavior of the Index against this price level at Close will be very important to watch over the coming days. If the NIFTY manages to move past and close above 50-DMA, it may extend itself to the falling trend line; however, it will not result in any change of trend, which currently remains downward.

 
Friday is likely to see the levels of 9145 and 9190 acting as resistance points. The supports will come in at 9050 and 8960 levels.
 
The Relative Strength Index (RSI) on the daily chart is 48.01; it stays neutral and does not show any divergence against the price. The PPO remains negative. The daily MACD is bearish as it trades below its signal line. A small white body emerged on candles as the NIFTY ended higher than it opened. This can be classified as a spinning top, given the small size of the real body. This remains insignificant in the present technical setup.
 
The pattern analysis shows the NIFTY consolidating again below its immediate resistance point of 50-DMA. The 50-DMA, which is presently at 9112, is expected to act as a support on the closing basis. If the Index moves past this, then it can extend its up move to a limited extent.
 
We have an extended weekend this time, as Monday is a trading holiday. There are possibilities that the NIFTY wears a cautious look ahead of Close on Friday, given this extended weekend. We reiterate the need to approach the markets on a defensive note. It would be prudent to keep chasing the up move, if any, through defensive and resilient sectors and stock and also protect profits vigilantly at higher levels.
 
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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