Thursday Trade Setup: Expiry To Dominate Moves; Price Behavior Against This Level Imp To Watch
Updated: Aug 29, 2019
The session on Wednesday remained entirely on the expected lines. Not only did the volatility resurfaced, but the markets also had a trending day as well. After opening flat and staying the positive territory for a brief time, the NIFTY steadily declined and remained in the falling trajectory for the rest of the session. It was in the last half an hour of the trade that the Markets came off its lows. The headline index ended the day with a net loss of 59.25 points (-0.53%).
Thursday will see the expiry of the current derivative series. The session will remain predominantly affected by the expiry induced trades, and this will also make some room for the volatility to stay in the session. The discomfort of the market participants is evident at lower levels in the markets as the second dose of supportive measures from the Government is awaited. As per the weekly options data, the level of 11000 remains an inflection point for the markets, and it will be vital to observe the behavior of the markets against this level.
If no global negatives are handed out overnight, we expect a stable started to markets on Thursday. The levels of 11150 and 11210 will act as resistance points while supports will come in at 10950 and 10880 levels.
The RSI on the daily charts is 47.2128; it remains neutral and does not show any divergence against the price. The daily MACD stays bullish and trades above its signal line. No important formation is seen on the Candles.
The pattern analysis shows that the NIFTY not only trades below its 200-DMA which is currently at 11205, it has also halted its technical pullback just below the neckline of the rounding top formation that it breached on the downside.
Given the present technical structure, the NIFTY has formed a potentially strong base near the 10800 levels, but in the same breath, it has a formidable resistance to deal with in the 11100-11200 zone. The markets are likely to oscillate in this broad range, and sustainable upside moves will happen only after the NIFTY moves past the 200-DMA on a closing basis. We recommend keeping positions on either side at modest levels and keep protecting profits amid broad range-bound moves that markets offer going ahead unless a firm directional bias is established.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)