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Outlook For Wednesday: NIFTY Back Inside The Broad Range; These Levels Come Into Play Once Again

In a stronger-than-expected session of trade, the NIFTY pulled itself inside the broad trading range as it ended the day with smart gains. The markets saw a modestly positive opening which got stronger as the day progressed. The index moved past the 11800 levels by afternoon and after that it stayed more in a sideways trajectory. The markets spent the rest of the session maintaining those gains and oscillating in a 40-odd points range. There was a minor paring of gains in between, but the Index managed to stay firm as it ended with a net gain of 144.35 points (+1.24%).

The markets have pulled themselves back inside the broad trading range. This keeps the wide trading range of 12000-11620 levels intact. Also, it validates the level of 50-DMA as a valid short-term support on a closing basis. The NIFTY bounced off twice after testing these levels. Going ahead, the level of the previous high within the range and the 11600 level would be crucial to watch. The volatility cooled off a bit with INDIAVIX coming off by 3.84% to 24.2400.

Wednesday is likely to see the levels of 11865 and 11915 acting as immediate resistance points. The support comes in at 11750 and 11710 levels.

The Relative Strength Index (RSI) on the daily chart is 49.21; it continues to stay neutral while not showing any divergence against the price. The daily MACD is bearish and trades below the signal line. Apart from a white body that emerged, no other formations were noticed on the candles.

The pattern analysis shows that the NIFTY is back inside the wide trading rage of 12000-12650 that has been created over the past several days. There has been a small gap as well on the upside. However, since the gap has occurred within an area formation, it does not hold any significance from the technical perspective.

Going ahead for here, the NIFTY must watch against the 11930 level. This was the lower top formed by the index while being inside the broad area formation, If the NIFTY is able to move past this, then it may test the 12000 levels again. However, until then, up moves should not be blindly chased as the Index continues to stay vulnerable to profit taking bouts from higher levels. We recommend avoiding fresh purchases and keep leveraged exposures under strict control while vigilantly guarding profits 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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