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Trade setup: Nifty may look up, but key hurdle at 11,300-11,350
Nifty witnessed sharp volatility on Friday after struggling to cross the resistance within the 11,300-11,350 zone and ended with a deep lower.
The market had seen a constructive opening for the day and spent the primary half of the session trading within the 11,300-11,350 zone. The afternoon session noticed Nifty get caught in a pointy corrective transfer. The index got here off over 250 factors from the excessive level of the day. Regardless of recovering some 60-odd factors from the low level of the day, the headline index ended with a internet lack of 122 factors, or 1.08 per cent.
In our earlier notes, we had raised considerations about Nifty’s incapacity to maneuver previous the 11,300-11,350 zone and the persistently falling volatility. Following Friday’s trade, volatility, represented by INDIA VIX, shot up 5.37 per cent to 21.6725.
Additionally, the session noticed Nifty make a decrease prime inside the rising channel as soon as once more, even because it examined the decrease pattern line to take help. The 11,100 could be an essential stage to observe within the coming days.
Given the steep drop witnessed till the top of the earlier session, Nifty may see a gentle technical pullback and see a modestly constructive begin to Monday’s session. The 11,225 and 11,280 ranges will act as key resistance factors, whereas helps will are available at 11,150 and 11,000 ranges.
The Relative Energy Index, or RSI, on the each day chart stood at 57.57. It has shaped a contemporary 14-period low, which is a bearish sign. The RSI, nevertheless, is impartial and doesn’t present any divergence towards value. The each day MACD stays bearish and trades beneath the sign line.
A big engulfing bearish candle has appeared on the chart. This engulfing bearish sample has added credibility and bolstered the significance of the 11,300-11,350 zone as a key resistance.
Over the following few days, Nifty will face stiff resistance close to the aforesaid zone in any pullbacks try, because it has shifted its resistance factors decrease. Nifty’s behaviour towards the 11,100 stage must be watched critically. Any breach of this stage will imply a breach of the rising channel on the draw back and this may invite incremental weak spot.
If the 11,100 stage is defended, we may see the market trade in a rangebound approach. A extremely selective method is suggested for the day.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founding father of Gemstone Fairness Analysis & Advisory Providers, Vadodara. He could be reached at [email protected])