​Trade Setup: 12,000 upper resistance point for Nifty; weakness in US dollar can be supportive

It was a day of a precarious trade for the domestic equity market as it witnessed a shaky opening but ended on a mildly positive note.

As the overnight global cues were weak, the Indian market had a weak opening. However, the market soon crawled into the positive territory. The initial few moments in negative territory marked the low point of the day for Nifty. After that, the index stayed in the rising trajectory as it kept making incremental gains. The second half of the session witnessed paring of all the recovery. Though Nifty did not slide into the negative territory again, bulk of the gains were lost. The benchmark index ended the day with a modest gain of 23.75 points or 0.20 per cent.

The market, in general, is critically poised. Nifty showed a range-bound trade again and it was the third such session that still remained within the large trading range that was witnessed on Thursday. The pullbacks are happening, but it is lacking the kind of conviction that requires; this keeps the level of 12,000 as a strong resistance point unless taken out with force.


Volatility continued to rise as the India VIX inched higher by 3.99 per cent to 22.6900. Unless taken out, 12,000

remains a strong resistance point to watch in the coming days.

Wednesday’s session is likely to see 11,940 and 12,000 acting as resistance points, while support would come in at 11,865 and 11,800 levels.

The Relative Strength Index (RSI) on the daily chart is 61.85; it stays neutral and does not show any divergence against price. The daily MACD is bullish as it trades above its Signal Line. However, the sharply narrowing slope of the histogram suggests sharp deceleration in the momentum. A spinning top that occurred on the candles continues

to suggest an indecisive and cautious session in the market that was devoid of any directional cue.

Overall, the market continues to remain in a broad consolidation range with the level of 12,000 acting as an upper resistance point. Nifty is exposed to seeing profit taking bouts at higher levels. Any mild weakness in the US dollar can be supportive as it has been over the past two days.

We suggest continuing to adopt a prudent approach while navigating the market. Sticking to defensives will be more risk-rewarding and will provide resilience to corrective moves, if any. While keeping leveraged exposures under

control, a cautious approach is advised for the day.

(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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