Wednesday will be the penultimate day of the expiry of the current derivative series, and the session is expected to be dominated by rollovers.
There are mild chances of Nifty attempting a technical pullback. However, if this happens, it will meet stiff overhead pattern resistance, which would limit the gains.
Wednesday’s session is likely to see a stable start, with 11,850 and 11,905 levels acting as immediate resistance. Support may come in at 11,775 and 11,700. In the event of any further downside, the trading range is expected to get wider than usual.
The Relative Strength Index (RSI) was at 39.02, and stayed neutral, showing no divergence against the price. The daily MACD was bearish and traded below its signal line. No important formations were seen on the candles.
As pattern analysis, Nifty is trading below its short-term 20-DMA, 50-DMA and 100-DMA. The 100-DMA presently stands at 11,961, and this level is expected to act as stiff resistance in the event of a sharp technical pullback.
In the immediate short term, the index may also face resistance near the 11,900 level. This is a pattern resistance in the form of a lower trend line of the broadening formation that Nifty had violated on the downside. The 11,900-11,960 zone has become a crucial resistance zone. Unless the index moves past this zone again, no sustainable upsides are likely.
It would be prudent for traders to lay more emphasis on protecting profits at higher levels rather than chasing technical pullback.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])
