Trade setup: Nifty50 may remain cautious ahead of long weekend


A range bound session was witnessed on Thursday, as expiry of February derivative series remained less volatile than expected. The market made a stable start, but soon pared opening gains, to spent most part of the session in a defined range.

The headline Nifty index finally ended with a minor loss of 14.15 points or 0.13 per cent.

As we step into Friday’s trade, we expect Nifty to remain cautious and not show any major upsides. The index continued to trade below its 50 and 200 DMAs and the 10,940 level is likely to act as important resistance on a closing basis. Moreover, amid geopolitical tensions, no major buying may be seen over the extended weekend, as Monday is a trading holiday.

Friday is likely to see the levels of 10,860 and 10,890 acting as immediate resistance. Supports may come in at 10,750 and 10,680.

The Relative Strength Index (RSI) on the daily chart stood at 48.9494 and it remained neutral, showing no divergence against the price. The daily MACD continued to trade above its signal line. A black body emerged on the candles and its occurring near the resistance zone of 50 and 200 DMAs reinforce the credibility of these two resistance points.

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Though Nifty continued to trade in a broad range and remained above the 10,680-10,720 zone, which is the rising trend line support, the market has shown some cracks Creeping in.

Failure to move past 200-DMA, coming off from the 10,940 level and creating a lower top might make immediate upmoves difficult.

There are also strong possibilities of the market witnessing volatile profit taking bouts from the higher levels in event of any upmoves. Amid continuing geopolitical tensions across the borders, we recommend remaining light on exposures and avoid taking any major positional calls over the extended weekend. A cautious view is advised for the day.

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





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