Nifty outlook: Trade setup positive, but key resistances pose big hurdle

In extremely volatile trade on Wednesday, Nifty swung 100-points on either side in the last two hours of trade before settling the day with gains. The market saw a positive opening and spent a major part of the session maintaining those gains and trading sideways.

However, late-afternoon trade saw a sharp decline, which was followed by an equally sharp recovery from the lows. Nifty recovered nearly 105 points from the low to end the day 53 points or 0.49 per cent, higher.

Nifty may see a positive start to trade on Thursday, but the session is not going to be an easy one. In the previous session, Nifty faced resistance at its 100-DMA and even after the sharp rebound halted at this level. Thursday’s opening and trajectory will be crucial to deciding Nifty trend for the day.


Nifty is likely to see the 10,867 and 10,940 levels act as immediate resistance, while supports should come in at 10,795 and 10,750 levels.

The Relative Strength Index (RSI) on the daily chart stood at 54.6775; it remains neutral and does not show any divergence against price. The daily MACD remains bearish and trades below its signal line.

On the candles, a Hanging Man has emerged. Since it has emerged during an uptrend, it may halt the potential upward move. However, in the present context and chart structure, it has appeared inside the area formation and may not have any significant impact. In any case, such formations require confirmations on the next trading bar.

Pattern analysis reveals Nifty continues to remain in an area formation of an ascending triangle. Two important DMAs; 200 and 100, remain in this formation and the index will have to move past them to achieve any sustainable upward movement.

Though Nifty has been posting modest gains over past couple of days, it is yet to move out of this ascending triangle formation. The underlying bias remains positive, but unless the overhead resistances are taken out, Nifty will remain volatile and face bouts of profit taking at higher levels. Remain highly stock specific and vigilantly protect profits at higher levels.

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