Stable Session Expected For Friday; NIFTY Requires To Stay Above This Imp Weekly Level
The Indian equities continued with its up-move and ended another day with modest gains. After series of eight consecutive day of declines, the markets registered gains on the second day in a row, though it came off a bit from the high point of the day. After witnessing a tepid start, NIFTY saw a range bound movement all through the day. It continued to resist to important levels and finally ended with gains of 54.40 points or 0.51%.
Even though the NIFTY advanced higher, it is yet to encounter major resistance points that are present on the daily charts. The 50-DMA and the 200-DMA which are at 10823 and 10860 remain in close proximity to each other. We expect a stable start once again as suggested by F&O data, there are high possibility of the NIFTY attempting to inch higher.
Friday is likely to see the levels of 10820 and 10860 acting as immediate resistance points. Supports come in at 10720 and 10680 levels.
The Relative Strength Index (RSI) on the daily chart is 49.2888; it remains neutral and shows no divergence against the price. The daily MACD continues to remain bearish and trades below its signal line. A white body occurred on candles. This merely suggests continuation of an up-move; apart from this, no major formations were observed on Candles.
The pattern analysis on the daily charts suggests that the NIFTY has averted a near term weakness by pulling itself back inside the broad range that it has been trading in over past several weeks. It trades above its 100-DMA but remain below its 50-DMA and 200-DMA levels.
Overall, so long as NIFTY remains above the 10680-10700 area, we will see it trading with positive undertone. Despite this fact, we cannot overlook the important resistance points that the markets are yet to move past. Until the levels of 50-DMA and 200-DMA are taken out, the markets will remain prone to profit taking from higher levels.
Apart from this, with Friday being the last trading day of the week, it will also be important for NIFTY to move past and remain above 50-Week Moving Average which is presently at 10791. While keeping the increase in net Open Interest in view which suggest fresh longs, we suggest refraining from shorts. However, profits may be protected at higher levels. Cautiously 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)