Trade setup: Tread with caution for now and stay light on positions
Friday’s session will likely see levels of 11,380 and 11,420 act as immediate resistance.
The NSE Nifty faced mild selling pressure at higher levels, as it traded with no directional bias throughout the day to end with a small gain of 0.01 per cent. The index continued to remain overbought on key indicators.
As we approach last session of the week, do not expect any major upmove. If at all, Nifty manages to move higher, it would make the rally unhealthy for retail investors.
Despite liquidity chasing the rally, Nifty continues to stare at probable consolidation from the current levels.
Friday’s session will likely see levels of 11,380 and 11,420 act as immediate resistance. Supports may come in at 11,280 and 11,210.
The RSI on the daily chart stood at 74.04, and it has marked a fresh 14-period high, which is bullish, showing no divergence against the price.
The daily MACD continued to trade above its signal line and no significant formations were observed on the candles.
As per pattern analysis, it has been observed that Nifty has broken out from the 10,960 level and has witnessed a sharp move. However, given the present structure on the charts, it looks exhausted and awaits imminent consolidation from the current levels.
All in all, the Bollinger bands are over 52 per cent wider-than-normal. This means that volatility might decrease in the coming days and Nifty might consolidate in the near term.
The index also remained overbought on key indicators. The collective reading of the daily chart showed continued vulnerability of the market facing consolidation.
We advice to refrain from making any major purchases and continue to guard profits at the higher levels. A cautious view is advised for the day.
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