The markets continued to consolidate for the sixth day in a row; it opened on a modestly positive note, soon drifted in the red, and spent the rest on the session in a capped range before ending with minor losses. The NIFTY opened on a positive note, but it marked its high point of the day in the early seconds of the trade. After a ranged trade in the first hour, and staying briefly in the positive territory, the NIFTY slipped in the negative zone. The markets did not take any directional focus and stayed above their key support area. After having spent the day in a sideways trajectory by oscillating back and forth in a narrow 80-point range, the headline index closed with a modest loss of 69.75 points (-0.40%).
The consolidation that is being seen over the past six days has been one of the classical ones; the NIFTY has not managed to move above the 100-, and 50-DMAs which presently stand at 17339 and 17192 respectively. On the other hand, it has held on to the 200-DMA as crucial support on a closing basis; 200-DMA presently stands at 17036. The Options data continues to indicate the maximum CALL OI at 17500; this makes the zone of 17350-17500 a stiff resistance zone for the markets. On the other hand, any violation of 17000 levels will invite incremental weakness in the markets.
Monday is likely to see a quiet opening; the levels of 17200 and 17325 will act as potential resistance points. The supports come in at 17050 and 16940 levels.
The daily RSI is 53.74; it does not show any divergence against the price. The daily MACD is bullish and above 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 while the NIFTY is found it difficult to move past the 500-, and the 50-DMAs, it has held on to the 200-DMA as its support on a closing basis. In other words, the NIFTY has formed a trading range between 17000-17500 levels; it will not achieve any directional bias so long as it is below 17500 or above 17000. Breaching on either of these levels will result in a directional move.
Seeing the similar setup from a different angle, NIFTY is not expected to stage any directional up move so long as it does not take out 17500 convincingly. Heavy exposures must be avoided so long as the markets are in a trading range and are devoid of any directional bias. While continuing to stay stock-specific, a continued 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)
