Trade setup: Nifty may consolidate more, stay in 11,800-12,000 zone
Wednesday’s session may see a stable start, with 11,975 and 12,030 acting as resistance.
We expect the market to remain in consolidation for some time. The F&O data continues to show 12,000 as a strong resistance point and unless this level is taken out comprehensively, the market will continue to consolidate in a broad range. For now, Nifty is likely to trade in 11,800-12,000 zone.
Wednesday’s session is likely to see a stable start, with 11,975 and 12,030 levels acting as strong resistance. Supports may come in at 11,860 and 11,775.
The Relative Strength Index (RSI) on the daily chart stood at 69.48 and slipped below the 70 level from the overbought area, which is bearish. The RSI did not show any divergence against the price.
The daily MACD remained bullish and traded above its signal line, while Percentage Price Oscillator (PPO) remained positive. An engulfing bearish candle was formed on the charts. This formation has occurred after a significant upmove, and this has the potential to stall the current momentum. However, this would require confirmation on the next trading session.
The loss of momentum is visible on the charts. Unless the overhead resistance at 12,000 is breached comprehensively, the upside will remain limited. Nifty will remain vulnerable at higher levels.
We recommend traders not to go for aggressive longs, unless the overhead resistance is breached and a sustainable upmove is established. With equities expected to oscillate on either side, protect your profit and approach the market cautiously.
(Milan Vaishnav, CMT, MSTA, is a Consultant Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at email@example.com)