Friday Trade Set-up: Up-moves, If Any, Should Be Best Avoided; Protect Profits At Higher Levels
The Wednesday’s session saw the markets slipping into the consolidation mode and ending the day flat with modest losses. Though the markets did not see any major cuts, it spent the session oscillating in a narrow 25-point range all throughout the day. While avoiding taking any directional call, the headline index NIFTY50 ended the day with a net loss of 11.35 points or 0.10%.
We will approach Friday’s’ trade after a holiday in between on Thursday. As the markets adjust to the global trade, we expect a quiet start to the session. Even if the markets witness any up-move, it should be best avoided as we expect consolidation to persist and even get deeper if the global markets take a breather. Our domestic charts too remain steeply overbought and does not suggest any blind chase to the momentum unless the markets see some healthy consolidation, or some minor corrective moves.
Friday is likely to see the levels of 11560 and 11610 acting as immediate resistance levels. Supports come in at 11480 and 11410.
The Relative Strength Index (RSI) on the daily chart is 78.3568; it remains neutral and shows no divergence against the price. The daily MACD continues to remain bullish while trading above its signal line. Apart from a small black body that was formed on candles, no significant formations were observed.
The pattern analysis continues to suggest that the NIFTY has reached its potential price targets after breaking out of a formation. This further makes up a case of a consolidation or some minor corrective moves which now has become almost imminent.
The daily charts remain at steeply overbought levels and this very clearly suggest exercising caution as we chase the liquidity. The Federal Reserve has kept the rates unchanged. The commentary has remained largely dovish on expected lines as the Fed does not see any more rate hikes coming up in 2019. Though all these are a Rupee positive factors, this may remain largely a non-event for the markets as it stood discounted for since long. Any sentimental uptick, if at all there is any, should be utilized to lighten the long positions and protect profits at higher levels. A continued cautious outlook 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)