Trade Setup: Nifty confined within a broad consolidation range; don’t chase up moves

After opening on a mildly positive note, Nifty soon slipped in the red. After that, it came in the positive territory momentarily but largely traded in the negative zone. The index oscillated within a defined 100-point trajectory during the session and took no directional bias during the day. The headline index ended with a negligible loss of 18.70 points, or 0.13 per cent.

In the previous session, Nifty bounced off from its 100-DMA level at 14,575. This point continued to stay as a major support level for the market on a closing basis. Right now, the index has bounced off from this point and has ended a notch below its 50-DMA at 14,723. The strikes of 14,800, 14,900 and 15,000 continued to add Call OI; this indicates that these levels will continue posing resistance to Nifty going ahead. The level of 15,000 continued to remain a major immediate resistance point for the index.

ET CONTRIBUTORS

The NIFTY PCR across all expiries stood at 1.11. Volatility rose marginally as India VIX moved higher by 0.93 per cent to 20.2675. It stood near one of its lowest levels seen in the recent past. Nifty is likely to have a stable start on Monday. The levels of 14,760 and 14,810 will act as resistance points, while support will come in at 14,610 and 14,560 levels.

The Relative Strength Index (RSI) on the daily chart stood neutral at 49.74 and did not show any divergence against price. The daily MACD remained bullish and above its Signal Line.

The pattern analysis shows that even if the market moves higher, it will continue to remain under consolidation and within the falling channel formed after marking the high at 15,431. The 100-DMA will continue to act as an immediate major support for the index on a closing basis.

Nifty is unlikely to make any major directional move on the upside as long as it stays below 15,000 level. Overall, the index will continue staying within a broad consolidation range unless the level of 15,000 is taken out convincingly. We recommend laying more emphasis on protecting profits at higher levels. Rather than chasing up moves to make new purchases, take some money off the table. While keeping new purchases highly stock-specific, a cautious view 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 [email protected])