On Monday, Nifty’s opening trend and the trajectory it forms in the first hour will influence the trend through the session. Remember, the US markets closed in the negative on Friday, and that might induce some weakness in Asian markets on Monday. There is a possibility that Nifty might open in the negative just near or above the crucial 100-DMA. It would be important to see the price action after that.
Volatility continued to cool off on Friday and volatility index INDIA VIX declined 4.74 per cent to 29.9650. The 10,250 and 10,335 levels are likely to offer resistance to Nifty on Monday while supports will come in lower at 10,175 and 10,100 levels.
The Relative Strength Index, or RSI, stood at 64.35. It remains neutral and does not show any divergence against price. The daily MACD has turned bullish as it showed a positive crossover. However, with the histogram almost flat, the momentum remains negligible on this indicator.
A white body has emerged on the candles, signalling that the market trend may remain upward.
Pattern analysis showed Nifty continues to trade in an upward rising channel. In the process, it now trades above two of its three key moving averages. The index rules above the 100 and 50 DMAs. However, both of these averages remain below the 200 DMA, which shows that Nifty is in an intermediate trend and the primary uptrend has been disrupted for the near term.
However, the unabated rise of the market has made chasing the momentum riskier than before. In the current technical setup, the best way to approach the market would be to keep strict trailing stop losses or stay away from aggressive long positions. We recommend not getting complacent at current level and approaching the market with a lot of vigilance and caution.
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])
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