The NSE benchmark Nifty on Wednesday remained in current area formation and continued to consolidate near its critical resistance zone of 10,900-10,950.
Despite a positive opening and making a high of 10,928, index hea ded nowhere and traded in a capped 40-point range.
Nifty finally settled with a gain of 3.50 points or 0.03 per cent.Expect a quiet start to trade on Thursday.
However, Nifty may attempt to break out from present pattern.
Such a breakout will occur only after index moves past 10,900-10,950 zone, which is an important resistance area.
Sustainable upmove shall occur only after these levels are taken out.Thursday is likely to see levels of 10,950 and 11,025 acting as immediate resistance area.
Supports may come in at 10,840 and 10,800.The Relative Strength Index (RSI) on daily chart stood at 55.9891 and it stayed neutral, showing no divergence against price.
The Daily MACD has shown a positive crossover and is now bullish, as it traded above its signal line.A spinning top occurred on candles.
This denotes indecisiveness among market participants and often occurs near important support or resistance area.The pattern analysis suggests that Nifty has remained in an ascending triangle pattern.
While remaining in this pattern, market has supports at its 100-DMA and 200-DMA, which are 10,838 and 10,813, respectively.To break out from present pattern, Nifty will have to move past 10,900-10,950 zone.
Sustainable upmoves shall occur only after these levels are taken out.
Until this happens, we will see Nifty consolidating in a capped range.The FO data, when read along with present structure on charts, suggests buoyant undercurrent.
This means that unless Nifty breaches 10,800 mark on downside, we will not see any significant weakness creeping in.We recommend staying away from creating shorts and all periods of consolidation should be used in making select purchase as present undercurrent remains intact.(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara.
He can be reached at milan.vaishnav@equityresearch.asia)