Trade Setup: Nifty may face stiff resistance in 10,915-10,950 zone

Indian equity market started new derivative series on a positive note, as the NSE benchmark Nifty extended its upmove and ended with a gain of 80.10 points or 0.74 per cent.

The Fridays session remained rangebound, as the index oscillated in a 40-point band for the major part of the session.

The last trading session of 2018 too, is likely to remain rangebound. Market is expected to see a quiet start and is likely to remain in a capped range, while not making any meaningful moves on either side.

Though Nifty is broadly expected to trade on a positive note, the 100-DMA level of 10,913 will continue to remain important resistance area.

Monday is likely to see the levels of 10,915 and 10,980 acting as immediate resistance zone. Supports may come in at 10,810 and 10,770.

The Relative Strength Index (RSI) on the daily chart stood at 55.4189. It remained neutral, showing no divergence against the price. The daily MACD was still bearish, as it traded below its signal line.

A white body occurred on the candles, which means the market ended higher than it opened. Apart from this, no technically significant formations were observed on the candles.

As pattern analysis, the Nifty has managed to move past the falling trend line pattern resistance. However, it trades below its 100-DMA level, which is at 10,913. The zone of 10,913-10,950 remains an important resistance one for the market.

Overall, from the F&O data and the technical structure of the charts, the Nifty presently remains indecisive, but undercurrent remains evidently bullish.

However, for any meaningful continuation of upmove, the market will have to move past 10,915-10,950 area with conviction. Until this happens, we will see Nifty taking a breather at higher levels.

We recommend avoiding shorts at the current levels and continue using dips for making select purchases. Though there are no signs, at present, that would signal a halt in the upmove, all rallies will find resistance in the 10,915-10,950 zone.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])

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