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    Trade setup for Monday: Choppy day ahead; keep exposure at modest level

    Synopsis

    With the expiry coming up this week, rollovers are going to influence the coming sessions.

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    The 11,450 and 11,530 levels will act as key resistance while supports will come in at 11,380 and 11,335 levels.
    NEW DELHI: In a disappointing session, the domestic stock market took a deeper hit on Friday as it slipped below crucial support levels and ended the day in the red.

    The market saw a positive opening for the day, but the index failed to maintain its opening gains.

    After trading positive for a very brief period, Nifty pared all the gains, slipped into the negative zone and continued to see sustained weakness all through the day. The headline index finally ended the day, losing 177.65 points (-1.53%).

    Nifty closed well below its 100-DMA level of 11,567 on Friday. This was crucial support that the index breached on the downside.

    In the event of any pullback, the 100-DMA is expected to provide a very stiff resistance. The upper band for the index has shifted lower to the 11,560-11,600 zone, and this zone will halt all the upsides that the market may see going ahead.

    MilanChartOthers

    There are chances that Nifty will see a tepid start to the week on Monday. There are possibilities of a soft opening, but we are also likely to see the market attempt a mild pullback later in the day.

    The 11,450 and 11,530 levels will act as key resistance while supports will come in at 11,380 and 11,335 levels.

    The RSI on the daily chart stood at 36.4708; it has marked a fresh 14-period low, which is a bearish signal. The RSI did not show any divergence from price. The daily MACD continued to remain bearish as it traded above the signal line.

    A large black body emerged on the candles. It marks the failure of the support area at the 100- DMA and makes it a critical level to watch out for in the event of any pullback.

    Pattern analysis of the daily chart showed Nifty is not only failing to take support at the 100-DMA but is also on an extended rising trend line drawn from the 11,000 level.

    All the downsides till date has come with a reduction in Open Interest, which shows long unwinding at higher levels.

    As the market comes closer to being mildly oversold, aggressive shorts may be avoided.

    Highly selective purchases may be made at lower levels, and all upward moves should be used to protect profits.

    With the expiry coming up this week, rollovers are going to influence the coming sessions.

    While maintaining exposure at modest levels, a cautious outlook is advised for the day.

    (Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

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    2 Comments on this Story

    Santosh Oak383 days ago
    This is headed FOR downward spiral.Don''t believe any interested parties.MARKET IS LIKELY TO GO MUCH LOWER THAN ANYONE CAN IMAGINE. Government has blundered and will not make amends.So rough times ahead for bulls.
    Sunilkumar Tejwani383 days ago
    shorts can be added at 11550 levels with stop loss at 11700
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