Trade setup: Big rally unlikely as Nifty50 to consolidate a bit more
Indian equity market continued to post modest gains as NSE Nifty opened higher, but failed to capitalise on the strong start on Monday. The index finally ended with a gain of 52.05 points or 0.44 per cent.
Over the past couple of weeks Nifty has witnessed increased volatility, and this has resulted in Bollinger bands getting nearly 80 per cent wider than normal. This is a strong indication that any substantial upmove may remain elusive and the market may trade in a broad range.
We expect a tepid start to trade on Tuesday and Dalal Street will continue to face selling pressure at higher levels.
Tuesdays session is likely to see 11,975 and 12,010 levels act as resistance points. Supports may come in at 11,870 and 11,810.
The RSI stood at 57.5935 and it has continued to remain neutral, showing no divergence against the price. The daily MACD stayed bullish, while trading above its signal line, although it was seen narrowing its trajectory.
A spinning top emerged on the candles. This reflected indecisiveness among market participants. Such a formation has the potential to stall an upmove temporarily; more so when it has occurred after a potentially bearish candle a day before.
Apart from broader technical factors, which may offer headwinds to Nifty at higher levels, market breadth also showed some signs of tiredness at present levels.
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