The second half of the session saw some recovery. Nifty rebounded over 100-odd points from the low point of the day. In the end, the headline index closed with a net loss of 162.40 points (-0.94%).
The markets are opening with a gap up or a gap down for several days. The behavior of the market remained orchestrated and such behavior often tends to defy technical principles in the short-term. So, in such given circumstances, it becomes all the more important that we keep broader technical picture in mind and stick to the technically derived values.
Taking this further, from a technical perspective, the levels of 200-DMA continue to act as an important resistance level to watch on a closing basis. The 200-DMA presently stands at 17,212.
Unless Nifty is able to crawl above this point, it will continue to stay vulnerable to selling pressures at higher levels.
We also approach the monthly derivatives expiry on Thursday. The session will continue to remain highly influenced and governed by the rollover centric activity. The previous session saw call writing happening at 17,000 and 17,100 levels. However, the highest call OI stands at 17,500.
It is also important to notice that the maximum Put OI stands at 17,000 levels. This makes the price behavior of Nifty against the level of 17,000 very important to watch.
Thursday is likely to see the levels of 17,150 and 17,240 acting as resistance points. The supports come in at 17,000 and 16,880 levels.
The RSI stands at 45.24. It is neutral and does not show any divergence against the price. The daily MACD is bearish and below the signal line.
A Doji emerged on the candles. Its occurrence near pattern supports may indicate a reversal. However, confirmation for the same is essential and must be watched for.
All in all, Nifty remains in a broad trading range of 16,850-17,500 levels.
On Thursday, it would be essential for Nifty to keep its head above 17,000. If it is able to do this, then a technical pullback can again be expected. If the levels of 17,000 is violated, some incremental weakness cannot be ruled out. It would be prudent to approach the markets on a very cautious note while keeping overall exposures at modest levels.
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]
