The market is likely to extend gains on Friday morning if there are no overnight negative news to deal with.
However, it is important to note that the headline index has again entered the previous technical setup where it was posting gains amid lack of strength and momentum. Lead indicators are again signalling the similar trend.
Nifty has again entered a trading range, which makes 50-DMA level at 12,040, an important support on a closing basis in the near term.
Friday’s session is likely to see 12,255 and 12,300 levels act as resistance. Support may come in at 12,165 and 12,100.
The Relative Strength Index (RSI) on the daily chart stood at 56.06 and even though it stayed neutral over the 14-day period, it remained in a range making lower tops. The indicator would need to show vigor in order to push the market higher.
The daily MACD stayed bearish as it traded below its signal line. A rising window emerged on the chart. This may have bullish repercussions, however, this will need confirmation on the next session, as it has occurred within a pattern.
As per pattern analysis, Nifty has entered the trading zone again, with a range of 12,000 to 12,300. The index continues to stay in a broadening formation.
Volatility has cooled off a bit after a sustained rise over the past couple of sessions. Geopolitical developments are expected to keep the market on tenterhooks, and this warrants caution despite the current technical setup.
It would be prudent for traders to avoid incremental overnight positions and protect profits at higher levels. Excessive leverage should be avoided and exposures must kept at modest levels.
(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)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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