Despite a positive start to the trade, NSE Nifty once again failed to achieve a breakout and traded with a corrective bias on Monday. The index snapped a three-day winning streak to end with a loss of 32.75 points or 0.27 per cent at 12,053.95.

Monday’s session has again reinforced the importance of Double Top resistance. Despite incremental highs, the index has not yet achieved a breakout.

Dalal Street will not see any significant and sustainable upmove until Nifty takes out 12,103 and crosses 12,100-12,160 resistance zone on a closing basis. It looks like it will be some time before market attempts to break out again.

Tuesday’s session is likely to see a soft start with 12,105 and 12,160 levels acting as stiff resistance. Supports may come in at 12,005 and 11,930.

The Relative Strength Index (RSI) on the daily chart stood at 57.62 and stayed neutral, showing no divergence against the price. The daily MACD was bearish and traded below its signal line. The Percentage Price Oscillator (PPO) remained negative.

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A classic Dark Cloud Cover was formed on the charts. This pattern emerges when the index opens higher and then declines to close below the half of the preceding candle near the low point. This pattern is precisely the opposite of a Piercing pattern and acts as a potential reversal point. However, it will require a confirmation on the next session.

As per pattern analysis, Double Top resistance level has remained in action. Nifty on Monday failed to capitalise on the strong start and was unable to achieve a breakout. The 12,100-12,160 zone continued to remain a formidable resistance, which the index will have to move past for a fresh round of sustainable upmove.

In the previous note, it was mentioned that the breakouts near major resistance points should not be anticipated. Instead, they should be awaited and further confirmed with proper evidence on the chart.

We would again advise traders to protect profit at higher levels unless a breakout is achieved. Until that happens, a stock-specific view should be adopted 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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