In the previous technical note, it was mentioned that the zone of 17800-18000 is likely to stay as an immediate resistance zone for the NIFTY. The Indian markets opened on a weak note and ended on a weak note as well. The NIFTY saw itself opening in the negative territory; it traded in a sideways trajectory with limited losses. The afternoon trade saw the NIFTY rebounding from lower levels. At one point in time, the index had recovered nearly all its day’s losses. However, this recovery was not sustained as the markets gave up again. The headline index ended the day with a net loss of 109.40 points (-0.62%).
The current week is a shortened one with just three trading days; the markets have exhibited a cautious and tentative move which is much on the anticipated lines. The options data show not only the Call writing taking place at 17800 and higher strikes, but it also showed Put unwinding happening at 17800 levels. This means that there are high chances that the level of 17800 continues to offer strong resistance to the markets. For any sustainable up move to happen, moving past 17800-18000 will be extremely crucial for the markets.
Tuesday is likely to see a tepid start to the day; the levels of 17750 and 17835 will act as resistance points. The supports come in at 17600 and 17560 levels.
The Relative Strength Index (RSI) on the daily chart is 57.13; it is neutral and does not show any divergence against the price. The daily MACD is bullish and stays above the signal line.
The pattern analysis shows that the level of 17800 was a double top resistance for the NIFTY; the index managed to move past this resistance briefly but eventually slipped below this point. This keeps the level of 17800 as one of the important pattern resistance levels in the immediate near term.
Overall, the NIFTY will continue to show a tentative bias for the next two days; it is highly unlikely that the markets show any runaway up move very soon. Given the shortened week, there are greater chances that the cautious approach may prevail in the markets; it is likely that the action stays highly stock-specific in nature. Also, so long as the NIFTY is below the 18000 levels, it will continue to say vulnerable to selling pressures from 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)
