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  • Milan Vaishnav, CMT, MSTA

Set-Up For Wednesday: NIFTY Creates A Minor Resistance Point Below The Imp 10950 Level

Daily MACD show positive crossover; trades above its Signal LIne

Markets suffered a gap down following news of early morning air strike by Indian Air Force targeting Pakistan terror camps across the LoC. This gap down opening sent calculations in a tizzy initially. However, as the day progressed, the markets saw a smart recovery from the lows of the day. The NIFTY recovered over 100-points from the lows of the day before closing with a modest loss of 44.80 points or 0.41%.

Speaking purely on an immediate short-term time horizon, the NIFTY has created a minor resistance point below the important 10950 level. After Tuesday’s trade, the index has formed a similar top on the second successive day at 10888. The Monday’s high of 10887 and the Tuesday’s high of 10888 have formed a minor resistance point for the markets.

Wednesday is likely to see the Markets continuing to trade in a range as it deals with the 200-DMA which is presently at 10862. Unless this level, followed by 10888 is taken out, we will see NIFTY struggling in a range and continuing to consolidate with limited moves. Once these levels are taken out, we will see the markets making its logical move towards the 10950 level.

Wednesday is likely to see the level of 10880 and 10950 acting as resistance points. Supports come in at 10820 and 10750 levels.

The Relative Strength Index (RSI) on the daily chart is 51.7744; it continues to remain neutral and shows no divergence against the price. The daily MACD has shown a positive crossover; it is now bullish and trades above its signal line. No significant formations were observed on candles.

Overall, the NIFTY has continued to remain in a broad range, and it has not shown any structural breach on the charts. Post the pullback that it witnessed over past couple of sessions, the NIFTY has returned inside the broad trading range that it has been trading over past couple of weeks. In the present situation, the NIFTY will have to move past the 200-DMA level and sustain above that to make obvious progression towards the 10950 level where it meets multiple resistance points.

We expect the markets to trade range bound and the underlying intent remains buoyant. We enter the penultimate day of the expiry of current derivative series and give the geopolitical news flow, some volatility may remain ingrained in the markets. We recommend maintaining modest exposures while avoiding shorts. A cautious, but positive 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)