The firm upmove was on the back of sharp short covering as this was coupled with shedding of net open interest by Nifty. The index is again near its vital pattern resistance of 11,850-11,870 zone. The traders must not get carried away by the Thursdays rally as the market is expected to face stiff resistance around these levels.
Some consolidation around the current level may happen in a capped range.
Still, Fridays session may see some followup positive moves in the initial trade. The 11,870 and 11,900 levels are the next resistance points. Supports may come in lower at 11,750 and 11,680.
The RSI on the daily chart stood at 53.0207 and it remained neutral, showing no divergence against the price. The RSI, when visually inspected, seems trapped around a couple of its pattern resistance points. The daily MACD remained bearish and traded below its signal line.
An engulfing bullish candle formed on the daily chart today. Though it translates into a potential bullish consequence, the present place of its occurrence makes it relatively less stronger or significant.
However, it cannot be ignored as it has emerged near the 50-DMA level, which is at the 10,686 level.
The pattern analysis showed that Nifty has held on to its 50-DMA support level on a closing basis. The 50-DMA, therefore, continues to remain an immediate support.
Given the fact that the present rally was founded on robust short covering, we dont expect any significant followup moves.
The market may trade on a positive noteRead More – Source