Domestic equity markets have continued to consolidate on weekly as well as daily charts, Nifty may continue to consolidate in a capped range while the overall trend continues to remain buoyant and intact. Monday’s session is likely to see a modest start to the markets and the levels of 8,880 acting as intermediate resistance. We are also entering expiry week and we will continue to see the coming sessions remaining dominated with rollover centric activity as well. For Monday, the level of 8880 and 8940 will act as immediate resistance levels whereas supports will come in at 8,775 and 8,750 levels.
The RSI—Relative Strength Index on the daily chart is 57.0474 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stands bearish as it trades below its signal line. A Big Black Candle occurring near the 8,890 levels have added credibility to the possible resistance levels in this area.
On the derivative front, the NIFTY September futures have shed over 8.88 lakh shares or 2.76 per cent in Open Interest. This continues to point towards some unwinding/offloading of long positions. Coming to pattern analysis, the markets have formed an intermediate high at 8,968 levels and this level remain sacrosanct as this point of time. A lower top has been observed at 8,890 levels and a big black candle formation at this point establishes the credibility of this resistance level and minor confirmation of a lower top. Given this formation, some amount of consolidation cannot be ruled out even if the markets see some temporary range bound movement. All and all, the overall structure on the daily chart remains intact and inherent trend remain buoyant. The levels of 8750 will be critical support in event of any consolidation. Individual stock specific strategy should be adopted and we reiterate to utilise any dips, if any, to make select purchases as overall trend remains intact.
(The author is CMT, Consultant Technical Analyst at Gemstone Equity Research & Advisory Services)