nifty: Trade Setup: 17,430 and 17,525 immediate resistance points for Nifty; stay light on overall positions
The mid-session saw some recovery, but that did not sustain and got sold as well. The headline index took support near the 17,300 levels. However, it continued to end negative with a net loss of 231.10 points (-1.31%).
The global trade setup remains weak. The Nifty will see a challenging start to the new week.
However, a sharp breakout again in the crude oil will lead to the oil & gas space trying to relatively outperform.
The strong retracement of the Nifty from near the 20-DMA, presently at 17,566, followed by the 100-DMA at 17,642, makes a strong resistance for the index.
Unless the Nifty moves past the 17,560-17,640 levels, i.e. unless it moves past 17,650, there are no chances of any runaway upmove in the markets. On the lower side, 17,000 remains the nearest important pattern support for the markets. Following Friday’s correction, the index has again put itself in a defined 17,000-17,650 consolidation-cum-trading zone for the immediate near term.
Monday is likely to see a shaky start; the levels of 17,430 and 17,525 will act as an immediate resistance point. The supports come in at 17,280 and 17,200 levels.
The Relative Strength Index (RSI) stands at 46.60; it remains neutral and does not show any divergence against the price. The daily MACD remains bearish and below the signal line. Except for a black candle on the chart, no other formations were noticed.
On the daily timeframe, the Nifty appears to be in a very wide trading range and may look bearish as a result of gaps on the either side. However, on the higher timeframe charts, there is no structural weakness seen. This means that while the Nifty remains in a broad but cleanly defined trading range, all downsides should be used to pick select good quality stocks.
Some defensive stance in the markets may be visible, but there are chances of some good quality financial, PSU banks, auto, and pharma stocks to show resilience. While continuing to stay light on overall positions is advised for the day.
Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and is based at Vadodara. He can be reached at [email protected]
