Trade Setup: Nifty’s next hurdle at 11,865, 11,915; don’t chase momentum blindly

In a stronger-than-expected session, Nifty pulled itself inside the broader trading range, as it ended the session with smart gains. The market saw a modestly positive start, which got stronger as the session progressed. Nifty moved past the 11,800 level by afternoon trade and stayed in the sideways trajectory. The index spent the rest of the session maintaining those gains and oscillating in a 40-odd points range.

It paired some gains in between, but managed to stay firm and end with a net gain of 144 points, or 1.24 per cent. The market has pulled itself back inside a broad trading range. This keeps the trading range intact in the 12,000-11,620 zone. Also, it validates the 50-DMA level as a short-term support on a closing basis.

Nifty bounced off twice after testing these levels. Going forward, it would be crucial to watch the previous high within the range and the 11,600 level. Volatility cooled off a bit with INDIA VIX coming off 3.84 per cent to 24.2400.


The 11,865 and 11,915 levels on Nifty are likely to act as immediate resistance points in Wednesday’s session, while support will come in at 11,750 and 11,710 levels. The Relative Strength Index, or RSI, on the daily chart stood at 49.21. It continued to remain neutral, without showing any divergence against the price. The daily MACD remains bearish and trades below the signal line. Apart from a white body candle that emerged, no other formation was noticed on the candles.

Pattern analysis shows Nifty is back inside the wide trading range between 12,000 and 12,650 levels, which had been created over the past several days. There has been a small gap as well on the upside. However, since the gap has occurred within an area formation, it does not hold any significance from a technical perspective.

Going ahead for here, one needs to watch the 11,930 level, the lower top that Nifty had formed when it was inside the broad area formation. If Nifty manages to move past this mark, then it may test the 12,000 level again. Until then, any bounce should not be chased blindly as the index continued to stay vulnerable to bouts of profit taking at higher levels. We recommend avoiding fresh purchases and keeping leveraged exposures under control while vigilantly guarding profits at higher levels.

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