The domestic stock market extend its winning run and hit fresh closing high on Wednesday.
NSE Nifty confirmed the breakout as it ended the session with a gain of 56.65 points or 0.47 per cent at 12,221.65.The headline indexs support has shifted higher to the 12,100 level.
However, the continuation of the upmove after taking out the Double Top resistance has not been explosive and lacks strength.
The Nifty OI PCR at present stands at 1.73, which can be seen as overbought.Also, the market on Thursday will react to GST council meeting, and given the technical setup, some consolidation at current levels may not be ruled out.The market will see expiry of the weekly options in the upcoming session and 12,200 will be a crucial level to watch out for.
With the market in uncharted territory, 12,250 and 12,295 levels will act as resistance in Thursdays session.
Support may come in at 12,160 and 12,000.The Relative Strength Index (RSI) stood at 65.39 on the daily chart and continued to show bearish divergence as it didnt mark a fresh 14-period high along with Nifty.The daily MACD showed a positive crossover and was bullish, trading above its signal line.
No significant formations were seen on the candles.Pattern analysis showed that Nifty has taken out the Double Top resistance at 12,103 and shifted its support higher.However, the market is lacking strength, and this might make the market to consolidate at current levels.As per the weekly options data, the 12,200 level will be crucial as this strike price holds the maximum Call open interest and second-highest Put OI.
The behavior Nifty against this level will be crucial on Thursdays session.However, taking a slightly extended view, the breakout will remain in force as long as the index keeps its head above the 12,100 level.A cautious outlook is advised for the day as we recommend traders to protect profits at higher levels and keep exposures modest.(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research - Advisory Services, Vadodara.
He can be reached at milan.vaishnav@equityresearch.asia)