In a very controlled and range-bound session of trade, the NIFTY continued to consolidate just below the pattern resistance and ended the day with a modest cut. The markets opened on a positive note and marked their high point of the day in the early minutes of the trade. Most part of the session was spent in a positive trajectory; however, the markets did not take any directional bias throughout the day. In the last hour of the trade, the markets gave up their gains and slipped in the negative. The headline index finally ended the day with a modest loss of 28.95 points (-0.17%).
From the technical standpoint, the index has resisted exactly at the rising trend line resistance which the index had violated; this basic support has turned into resistance on the way up. We approach both the monthly derivative expiry along the weekly options expiry. Looking at the options data, though significant call writing was seen at 17200, the highest Call OI stands at 17500 levels. On the lower side, the level of 17000 still continues to hold the highest Put Open Interest. This means that so long as the NIFTY is able to keep its head above the 17000 levels, the markets will continue staying in a range with upside resistance at 17200 levels.
Thursday is likely to see the levels of 17120 and 17200 acting as resistance points. The supports come in at 17000 and 16910 levels.
The Relative Strength Index (RSI) is 42.43; it is neutral and does not show any divergence against the price. The daily MACD is bearish and below the signal line. A black body emerged on the candles; apart from this, no other formations were seen on the charts.
The pattern analysis shows that the markets resisted exactly to the rising trend line which was earlier acting as a support for the NIFTY. Now that it stands violated, it is now acting as a resistance on the way up.
All in all, so long as the index is able to keep its head above the 200-DMA which presently stands at 16887, the markets will stay in a broad range and it will also stay relatively volatile than normal times. On the higher side, the 200-point zone of 17300-17500 is now an established resistance zone for the markets. In other words, so long as the NIFTY stays above the 200-DMA and below this mentioned zone, the markets will not achieve any sustainable directional bais.
With the monthly expiry on cards, the session is set to remain influenced by rollover-centric activities. It is strongly recommended to continue remaining light on overall exposures. While avoiding aggressive positions on either side, a highly selective and cautious approach is advised for the day.
This was first published by The Economic Times.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)
