Friday May Continue To Witness Consolidation; Up-moves, If Any, Should Be Dealt Very Cautiously
Much on expected lines, the markets applied some brakes on its unrelenting up-move and consolidated within a defined range. After witnessing a better-than-expected opening once again, the NIFTY oscillated back and forth in a given rage. It apparently kept witnessing mild pressures at higher levels and took no directional bias all throughout the day. After a remaining in a limited trading range, the NIFTY ended flat with negligible gain of 1.55 points or 0.01%.
The markets continued to remain overbought on key indicators. As we approach end of the week, we do not expect any major up-moves occurring in the markets. If at all there are any moves on the upside, they would make the present rally unhealthy for retail investors. Despite the liquidity chasing the markets, the NIFTY continues to stare at probable consolidation from current levels.
Friday is likely to witness the levels of 11380 and 11420 acting as immediate resistance points. Supports come in at 11280 and 11210 zones.
The RSI on the daily chart is 74.0384; it has marked a fresh 14-period high which is bullish. RSI does not show any divergence against the price. The daily MACD continues to trade above its signal line. No significant formations were observed on candles.
Going by the pattern analysis, it is observed that the NIFTY has broken out from 10960 levels and witnessed a sharp move. However, given the present structure of the charts, it looks exhausted and awaits imminent consolidation from current levels.
All and all, the Bollinger bands are over 52% wider-than-normal. This potentially shows that the volatility of the NIFTY might decrease in coming days and the index might consolidate in the near term. The NIFTY also remains overbought on key indicators. The collective reading of the daily chart shows continued vulnerability of NIFTY facing consolidation from current levels. We reiterate refraining from making any major purchases and continue guarding profits at higher levels. A cautious view is advised for the day.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst Member: (CMT Association, USA / CSTA, Canada / STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)