Wednesday is likely to see the levels of 10,873 and 10,900 acting as stiff resistance.
Highlights
Supports may come in at 10,740 and 10,680 levels.
The RSI on the daily chart stood at 52.0993.
Traders need to avoid shorts, remain stock specific.
The NSE benchmark Nifty mildly managed to top the important 200-DMA, as it extended its upmove on Tuesday. The session saw bank and pharma stocks outperforming the market. The index moved in a defined range and ended with a modest gain of 30.35 points or 0.28 per cent.
The Nifty has remained trapped in an ascending triangle and the range with the each passing day is getting narrower. Though the index has not penetrated the resistance area in a convincing manner, we expect a modestly positive start to the trade on Wednesday.
The session is likely to remain rangebound unless the index moves past its critical resistance areas ahead.
Wednesday is likely to see the levels of 10,873 and 10,900 acting as resistance, if it moves past its 200-DMA. Supports may come in at 10,740 and 10,680 levels.
The Relative Strength Index (RSI) on the daily chart stood at 52.0993, and it remained neutral, showing no divergence against the price.
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The daily MACD remained bearish while trading above its signal line. A small body emerged on the candles. This indicates indecisive behaviour of the market and often results into consolidation.
The pattern analysis showed that the market has remained in a capped range and in an ascending triangle formation.
The two important DMAs -- 200 and 100 -- lie within this area formation, and now it is now critical for Nifty to move past this level.
Overall, what we are witnessing is consolidation with a positive bias. We expect this rangebound trade to continue unless Nifty moves past the important 200-DMA and 100-DMA going ahead.
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Broadly speaking, the market remained in a narrow and no-trade zone and we are likely to see more consolidation until it takes a directional call.
We recommend traders to avoid shorts, remain highly stock specific and protect profits at higher levels.
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(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.)
