Trade setup: Nifty50 vulnerable; has stiff resistance in 11,700-11,735 zone
NSE Nifty, which is mildly oversold on the short-term charts, continued to edge up on Tuesday, fuelled by short-covering. The index ended with a gain of 74.25 points or 0.64 per cent at 11,662.60.
The 50-stock defended the 100-DMA level, inched higher and now eyes critical resistance zone of 11,700-11,735. This is the zone where 20-DMA and 50-DMA levels, which are 11,733 and 11,707, respectively, are placed.
The 20-DMA is seen sharply moving lower to cut the 50-DMA from above. The weekly options data suggests the 11,700 level to as a strong resistance point.
Wednesdays session is likely to see a tepid start. The 11,700 and 11,730 level will act as next resistance points while supports are at 11,600 and 11,550.
The Relative Strength Index (RSI) on the daily chart stood at 47.03 and it continued to remain neutral, not showing any divergence against the price. The daily MACD was bearish and traded below its signal line.
The pattern analysis showed that the short-term 20-DMA is sharply moving lower, and it appears to be cutting the 50-DMA from above.
The negative crossover of the two DMAs, which is likely in the near term, indicates short-term loss of momentum and points towards the possible show of fatigue at higher levels.
The weekly options data shows the highest call buildup at 11,700 strike. As of now, this level may pose resistance.
The technical structure of the charts also shows the 11,700-11,735 zone oRead More – Source