The NSE benchmark Nifty ended with a minor loss of 17.85 points or 0.17 per cent at 10,799.85 after spending much of the Mondays session is a capped and narrow range.
With the session remaining extremely rangebound, key thing to note was Niftys struggle with the levels of 10,820-10,850, as it failed to move past this important pattern resistance.
As we step into Tuesdays trade, we feel that some weakness might persist and Nifty may remain under modest pressure, but the downsides are likely to remain limited.
On the upper side, the struggle with the levels of 10,820-10,850 is likely to continue. The behaviour of the market vis-à-vis this zone is extremely important to watch out for in the coming days. Tuesday will continue to see the levels of 10,850 and 10,895 acting as important resistance area. Supports will come in at 10,765 and 10,710 zones.
The Relative Strength Index (RSI) on the daily chart is 57.7446. RSI continues to remain neutral, showing no divergence to the price. The daily MACD stays bullish while trading above its signal line. A small black body occurred on the candles and in the present context it holds no significance.
The pattern analysis shows that Nifty continued to resist to the falling trend line resistance area of 10,820-10,850 zones. Breach on the upside of these levels is necessary for any meaningful upmove to occur.
Overall, while Nifty continues to resist to the falling trend line that joined the high of 11,170 to the subsequent lower tops, it also continued to show some inherent strength by consolidating around the resistance area without showing any major declines.
The present amount of shorts in the system is likely to keep the overall downsides limited. However, in the same breath, unless the index moves past the 10,820-10,850 zone and sustain above that, it will remain vulnerable to pressure from higher levels and prolonged consolidation.
We recommend remaining modest on exposures, preserving cash and making select purchases with each available opportunity.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])