Domestic equity indices saw a gap-up start Wednesday morning. But soon, the frontline index came off nearly 200 points from the opening high, and spent the rest of the session trading sideways. Nifty eventually ended with a net gain of 187 points, or 2.03 per cent.
From a technical perspective, despite the gapup start, Nifty halted exactly at its 50-DMA, which currently stands at 9,393. Also, the session highlighted the vitality of the resistance in the 9,450-9,500 zone.
Weekly expiry of the options is coming up on Thursday; and data suggests maximum concentration of Call open interest at 9,500 level. So, it would be vital to see if Nifty closes at the 50-DMA or not.
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Thursday’s session is likely to see a stable start. The 9.445 and 9,500 levels will act as strong resistance on the higher side while supports will come in at 9,335 and 9,220 levels. Any down-move will widen the trading range.
The Relative Strength Index(RSI) on the daily chart stood at 52.16. It remained neutral and showed no divergence against the price. The daily MACD remains bullish as it traded above its signal line.
A Rising Window emerged on the candles. Such a candle resulting out of a gap on the upside has bullish implications. However, in this case, with the open and high being the same, and the candle being a large black body, it may not have the desired bullish implications.
Nifty continues to hang precariously outside the Rising Wedge pattern. After falling off the wedge initially, Nifty has stayed in a defined range instead of coming down, showing a lot of indecisiveness. The market continues to face a lot of uncertainty, and this continues to keep our analysis on similar lines.
We advise traders not to chase the upsides, if any, and instead focus on protecting profits at higher levels. Nifty’s behavior against the 50-DMA at close and against the 9,450-9,500 zone should indicate where it goes from here.
(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])
