While the market saw a remarkable recovery from the lower levels of the day, it continued to stay in a broadly defined consolidation range. The NIFTY saw a weak opening to the trade; it drifted lower to the levels very close to the psychologically important 17000-levels as it marked the low point of the day at 17003 in the afternoon session. After that, the NIFTY saw a sudden spurt; this not only helped the index recover all its losses but also took the markets in positive territory. After that, for the rest of the trading session, NIFTY stayed sideways in a defined range. It finally ended with a modest gain of 69 points (+0.40%).
The NIFTY saw itself recovering over 230-points from the low point of the day. From the technical perspective, it was for the fourth time in the past seven days that the NIFTY has rebounded or taken support at the 200-DMA which presently stands at 17043. On the higher side, though the index has closed a notch above the 50-DMA, it still rules below the 100-DMA which presently stands at 17332. Apart from this, as per the weekly options data, the maximum Call OI stands constant at 17500 levels. So, just like what is seen over the past several days, the zone if 17350-17500 continues to stay a strong resistance zone for the markets.
Tuesday is likely to see the levels of 17300 and 17385 as strong resistance points. The supports come in at 17180 and 17060 levels.
The Relative Strength Index (RSI) on the daily chart is 55.01; it stays neutral and does not show any divergence against the price. The daily MACD is bullish and stays above the signal line. A small hammer appeared on the candle; the appearance of such a candle near the important support zone of 200-DMA adds to the credibility of this support area.
The pattern analysis shows that the NIFTY continues to remain in a consolidation zone formed between 17000-17500 levels.
Overall, the present technical structure suggests that the markets will continue to oscillate back and forth between 17000-17500 levels; it is unlikely to achieve any sustainable directional bias until it is within this zone. The markets will have a definite trending move only if it is able to move past 17500 convincingly or violates the 17000 levels which will invite incremental weakness. Unless either of these two things happens, the NIFTY will continue to remain in this broadly defined trading range. So, unless the levels of 17500 are taken out convincingly, all profits must be protected as the markets remain vulnerable to profit-taking bouts at higher levels.
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)
