Trade setup: Nifty must take out 11,700-11,750 for next leg of rally

The 11,700-11,750 zone continued to pose stiff resistance to NSE Nifty on Thursday. In a highly volatile session, the index failed to take out 11,700 as it came off nearly 150 points after testing the 11,679 level. The headline index settled with a loss of 21.50 points or 0.19 per cent at 11,582.60.

For the third straight session, Nifty found resistance at the 11,700 level. This makes the 11,700-11,750 zone as a sacrosanct resistance area in the near term. With an engulfing bearish candle appearing near this zone, it makes the area all the more important over the coming session. We expect the market to face stiff resistance in this zone.

Dalal Street on Friday is likely to see a tepid start. Except for Muhurat session on Sunday evening, we have an extended weekend once again with Monday as a trading holiday. There might be some technical bounces, but they are likely to face strong resistance.


Friday’s session is likely to see 11,635 and 11,700 levels as resistance, while supports may come in at 11,556 and 11,510.

The Relative Strength Index (RSI) was at 59.76 and stayed neutral, showing no divergence against the price. The daily MACD remained bullish and traded above its signal line. The PPO remains positive.

The pattern analysis of the daily chart showed that Nifty has been finding it tough to negotiate double top resistance at 11,700. This makes the 11,700-11,750 zone a strong overhead resistance area.

The market is not likely to witness any runaway rally. Any upmove will face selling pressure, and we will see Nifty continuing to consolidate in a broad range.

Just like the previous sessions, the market will continue to throw stock or sector-specific outperformances.

We recommend traders to stay cautious and protect profits at higher levels.

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