Trade setup: Nifty50 is critically poised, needs to top 10,650 level

Indian stock market notched up decent gains on Thursday despite struggling with the pattern resistance area. The NSE benchmark Nifty saw a tepid start and got stronger as the session progressed.

However, the 10,650 level again proved to be a crucial resistance area, as Nifty pared some of its gains in the second half of the day. The index eventually ended with a gain of 40.40 points or 0.38 per cent.

Expect a soft start to the trade on Friday and the Nifty continuing struggling with the 10,600-10,650 zone. As we approach Fridays session, there are several things to take note of.

Market has been resisting to the 50-week moving average for the last several weeks. This along with the 200-DMA mark will continue to pose stiff resistance to the market ahead.

Expect the levels of 10,650 and 10,695 continuing to pose resistance to Nifty going ahead. Supports may come in at 10,560 and 10,510 zone.

The Relative Strength Index (RSI) on the daily chart stood at 53.6468 and it has marked a fresh 14-period high, which is bullish. The daily MACD was bullish as it continued to trade above its signal line. Apart from a white body that occurred, no significant formations were seen on the candles.

Overall, though attempting to move past the falling trend line resistance on the daily charts, Nifty has failed to clear the resistance zone of 10,600-10,650.

For Nifty to extend its pullback and test the 200-DMA on the daily chart, which is 10,756, it will have to move past the pattern area resistance zone of 10,600-10,650.

If Nifty fails to clear this zone, we will see market consolidating once again and the index remaining vulnerable to profit taking bouts at the higher levels.

Continue to approach the market with some caution on Friday.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached

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