Stock Market

Trade setup: 11,550 level to offer support to Nifty, but outlook is bearish

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In a rangebound session on Tuesday, the domestic equity market continued to fall, as Nifty slipped below its short term 20-DMA to end with a marginal drop of 0.16 per cent on fag-end selling. As we approach Wednesday’s trade, 11,550 will be important to track.

This level is likely to lend a mild support, as the index may see a pullback from this zone.

However, the market is broadly expected to have a bearish undertone.

In the same breadth, any slip below the 11,550 level will inflict more weakness in a technically weak market. Wednesday’s session is likely to see 11,610 and 11,685 levels act as resistance points.

The supports may come in at 11,550 and 11,440. The Relative Strength Index (RSI) on the daily chart stood at 53.4036 and has marked a fresh 14-period low, which is bearish. The daily MACD was bearish and traded below its signal line.

Apart from a black body, no significant formations were observed on candles. The pattern analysis of the daily charts showed that Nifty has failed to break above the 11,760 level.

This failure keeps the double top formation at this level intact.

At present, the index has slipped below its short term 20-DMA. We enter the penultimate day of the expiry of the current derivative series.

We will see the session dominated by rollovers.

This may provide some mild pullbacks in the market and may also bring in more volatility. If any pullbacks are witnessed, we suggest traders to refrain from chasing them. We also advise to keep purchases limited to defensive stocks and mantain a highly cautious view on the market. (Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara.

He can be reached at This email address is being protected from spambots.

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