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Trade setup: Nifty precariously poised, will remain rangebound above 11,800


The domestic equity market again failed its attempt to break above the double top resistance at 12,103. On Friday, it adopted a corrective move and ended the day with a loss. Nifty opened on a positive note after spending the initial hours in the positive before the market gradually slipped into the red. Nifty then stayed in the falling trajectory throughout the day.

The session witnessed secular selling pressure and showed no intent to recover at any point in time. The headline index finally ended the day with a net loss of 96.90 points, or 0.81 per cent.

With Friday’s decline, the market has again reaffirmed the double top resistance at 12,103. Nifty has not been able to take out this resistance despite making incremental highs. For the immediate short-term, the 12,103-12,160 zone remains a significant resistance, which Nifty will have to take out convincingly for any significant up-move to occur.

Until this happens, the market will continue to consolidate, and it is likely to face selling pressure at higher levels.

On Monday, the market may have a positive start if at all it tracks the positive global setup. However, the 11,980 and 12,065 levels will act as resistance, while supports will come in at 11,875 and 11,815 levels.

Capture

The Relative Strength Index (RSI) on the daily chart stands at 50.48; it has marked a fresh 14-period low, which is a bearish signal. The daily MACD is bearish and trades below its signal line. The PPO stays negative.

Pattern analysis showed Nifty has again failed in its attempt to break above the double top resistance. With Nifty is not breaking above the double top resistance, the 12,103-12,160 zone now remains a major overhead resistance.

Apart from failing to clear the double top resistance, Nifty has slipped below its short-term 20-day moving average, which currently stands at 11,979. This level will also act as a resistance if the market attempts a pullback. With the market slipping below the 20-DMA, it has increased the possibility of Nifty testing the lower band around 11,800.

However, as long as Nifty stays above 11,800, it will remain within a broad consolidation range. While avoiding excessive leverage, a cautious view on the market is advised for the day.

Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia





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