Trade Setup: Market looks indecisive; 17,800 level now key for Nifty

It was a day of positive consolidation for the domestic equity market. Nifty opened higher, got stronger during the day, came off its highs but maintained its opening gains to close in the positive zone. Following a favourable global trade setup, Nifty traded in a narrow range until afternoon. The afternoon session saw the market get stronger and Nifty went well past the 17,844 level. The 50-pack then came off the high point of the day, but managed to close near the opening level with a gain of 144.35 points (+0.82 per cent).

The expiry of weekly options influenced the session. The 17,800 strike price continued to witness high Call writing, and this made the market unable to sustain above this point and also prevented Nifty from settling above the 17,800 level. From a technical perspective, the 17,800 level remains an important resistance within the broad 17,450-17,950 consolidation zone that the market has created. Also, Wednesday’s high point of 17,884 remains an important level to watch. If any fresh thrust on the upside has to come, it would be very important for Nifty to move past the 17,800 level and sustain above that point.

Volatility continued to fall. India VIX came off by 6.79 per cent to 16.1550. Friday’s session may see a quiet start. The 17,835 and 17,900 levels will act as likely resistance points for Nifty while support may come in at 17,740 and 17,680 levels.

The Relative Strength Index (RSI) on the daily chart stood at 63; it remained neutral and did not show any divergence against the price. The daily MACD remained bearish and stayed below the Signal Line. A Spinning Top emerged on the candles. This is a type of candle with a small real body and is formed because of a very little difference between the opening and closing levels of the session. From the market’s psychology point of view, this reflects the the indecisive behaviour of the market participants.

While the market remains in a broad consolidation zone, it has tried to create a small congestion range for itself. This makes the 17,600 and 17,890 levels very important to watch, as any slip below the 17,600 level will take Nifty to the lower edge of the consolidation range, i.e., 17,400-17,450. On the other hand, if the market has to hit its high point again, it will be critically important for Nifty to move past Wednesday’s high point of 17,884.

We recommend continuing to navigate the market with a stock-specific approach. Profits should be protected on the either side, while keeping overall exposures at the modest level.


(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae and is based at Vadodara. He can be reached at [email protected])