Home Market Trade setup: Nifty awaits a clear breakout, may consolidate more

Trade setup: Nifty awaits a clear breakout, may consolidate more


The Thursdays session saw the market approaching its previous lifetime high of 11,171 level even as it continued to heavily consolidate around those levels.

The benchmark Nifty moved couple off points higher than the previous high, but soon saw some minor profit taking coming in. When the market pared all its gains, the late trade pulled it up again, but the index still ended below its previous high, up 35.30 points or 0.32 per cent.

Even as Nifty has marked a fresh high by couple of points, it has not achieved a breakout yet. It would not be a surprise if we see a tepid start to the trade on Friday.

There are chances that the market may continue to gather some more strength and see some more consolidation. Though the structure on the charts remains intact, the level of 11,171 will continue to pose resistance in form of a double top.

Friday is likely to see the levels of 11,180 and 11,245 playing out as immediate resistance area. Supports may come in at 11,110 and 11,045 zones.

The Relative Strength Index (RSI) on the daily chart is 69.3833 and it has marked its fresh 14-period high, which is bullish.

Daily MACD stays bullish while trading above its signal line. No significant formations were seen on the candles. If we have a look at pattern analysis, it is evident that the Nifty has closed very near to its previous closing high, but a clear breakout is still awaited.

Even if we take the previous all-time intraday high level of 11,171, Nifty is yet to see a clear breakout as of now.

Overall, despite several attempts that the Nifty made to move past and end above the 11,171-mark, it has not yet achieved a clear breakout even at the close.

The bands on the Nifty are getting wider-than-normal and there are chances that this also keeps the Nifty within a range for immediate the short term. We expect some volatility to creep in at higher levels.

We recommend keeping exposures in check and emphasis should be laid on protecting profits at higher levels until a clear directional breakout is achieved. Cautiously positive outlook is advised for the day.

STOCKS TO WATCH: Resilient technical setup is observed in stocks of ONGC, DHFL, Apollo Tyres, Fortis, Srei Infra, JK Tyres, Hero MotoCorp, Gati, Ashok Leyland, OIL, NCC, ITC and Canara Bank.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])

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