Tuesday may likely see a somewhat jittery start to the day. The levels of 17400 and 17450 will act as immediate resistance points. The supports come in at 17280 and 17200 levels.
After three days of strong technical pullbacks and two days of consolidation, the equity markets finally took a corrective turn and ended the day with a cut. Markets opened on a strong note on Monday as expected; Nifty50 opened positive and got stronger as the day progressed. Markets sustained their gains in the morning session; however, as it approached afternoon, it pared all its gains to slip into the negative territory. Selling pressure intensified and Nifty50 slipped below the 17400-level to test 17355.95, as it came off over 280-points from the high point of the day. The headline index showed no intention to recover; it ended the day with a net loss of 143.05 points (-0.82 per cent).
Not only for Tuesday but for the immediate near term, the level of 17400 stays very crucial to watch for. It would be very important for Nifty50 to cross above 17400 and keep its head above that level to avoid any further weakness. The benchmark index has slipped below the short-term 20-DMA which presently stands at 17421. This makes the 17400-17450 zone a resistance area for Nifty50 over the immediate near term. Volatility inched higher; India VIX rose 3.18 per cent to 16.5700.
Tuesday may likely see a somewhat jittery start to the day. The levels of 17400 and 17450 will act as immediate resistance points. The supports come in at 17280 and 17200 levels.
The Relative Strength Index (RSI) on the daily chart is at 46.90; it is neutral and does not show any divergence against the price. The daily MACD is bullish and stays above the signal line.
Nifty50 formed an engulfing bearish candle on the daily charts. This usually can cause some weakness; however, a confirmation will be required on the next bar.
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The pattern analysis shows that Nifty50 had managed to crawl and close above the 20-DMA which presently stands at 17421. However, following Monday’s session, it has again slipped below the short-term MA and this makes this point a likely resistance for the markets.
All in all, Nifty50 is still not completely out of the woods. While the short-term 20-DMA may act as a resistance, the markets have very important support at 100-DMA which presently stands at 17259. This point, i.e., 100-DMA is expected to act as major and important support. The present technical setup keeps Nifty50 tentative and vulnerable to profit-taking bouts. Given the present structure of the charts, it is strongly recommended to avoid creating heavily leveraged positions on either side. Exposures, long or short, should be kept low and at modest levels until a clear directional bias for the market is established. A cautious view is advised for the day.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and is based at 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.)
