Trade setup: Market may open in negative on Monday, 15400-15450 crucial support zone for Nifty

For the third day in a row, the Indian stock markets traded with a corrective intent though it closed flat on the last trading day of the week. The Nifty opened on a modestly positive note and marked its high point of the day in the early minutes of the trade. Soon after that, the Index slipped into negative territory. The selloff intensified as Nifty went on to test the levels of 15450 by middle of the session. However, the markets saw a short covering led recovery from that point. By the end of the session, Nifty managed to recover nearly all its losses. The headline index finally closed with a negligible loss of 8.05 points (-0.05%).

On the technical perspective, the markets almost achieved a throwback as it tested the levels from where it originally broke out. Given this technical behavior, there are greater chances that Nifty will retest these levels again. The coming week has weekly derivatives expiry coming up; we will see the coming sessions staying dominated with rollover centric activities.

The concerning factor is that the volatility continues to remain at its lowest levels. The INDIA VIX declined once again by 3.21% to 14.7975. This keeps room open for spikes in volatility which may not work out well with the markets. Monday is likely to see a negative start to the day. The levels of 15700 and 15765 will act as resistance points; the supports will come in lower at 15580 and 15475 levels. The

Relative Strength Index (RSI) on the daily chart is 60.09; it has marked a fresh 14- period low which is bearish. RSI, however, is neutral and does not show any divergence against the price. The daily MACD is bearish; it remains below the signal line. A Hanging Man occurred on the candles. The emergence of such a candle near the high point hints at continued disruption of the present uptrend. The pattern analysis reveals that if Nifty tests 15,450 levels again, it would have a classical throwback as such a move will take Nifty back to the levels from where it broke out.

The zone of 15400-15450 is the nearest crucial support zone for the markets. All in all, this is the time where market participants must continue focusing more on protecting profits at current levels. Rather than aggressively buying even in the short covering led rallies, emphasis should be more on vigilant protection of profits. Traders must keep their strict trailing stop losses in place to optimally achieve this. We recommend keeping fresh purchases at modest levels and adopt a cautious outlook on the markets.

(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])

Source link

Related Articles

Back to top button