Trade Setup: Nifty may slip into consolidation phase; 15,175-15,200 strong resistance zone

Following all the confusion and chaos in the previous session, the domestic equity market extended its up move and went on to end the day with a decent gain.

Headline index Nifty had a modest gap up opening following a stable overnight handover of the global trade setup and steady Asian markets. Nifty gradually pared most of its gain in the first half of the session, only to recover in the second half. The index did post intraday high in the late afternoon trade, but the last hour of the trade saw Nifty coming off a bit again from its high point. The index finally ended the day with a net gain of 115.35 points or 0.77 per cent.

On expected lines, the session remained largely influenced with the weekly options expiry and the expiry of the monthly derivative series as well. The concentration of maximum Call OI at 15,200 ensured the index not moving past that level throughout the day. Volatility also cooled off a bit with India VIX coming off by 5.28 per cent to 22.8925.

Going ahead from here, from the current technical perspective, crossing of the previous day’s high, i.e., 15,176 will be crucial if Nifty has to extend its up move. Friday’s session is likely to see the levels of 15,175 and 15,210 acting as immediate resistance points, while support will come in at 15,050 and 14,970 levels.

The Relative Strength Index (RSI) on the daily chart stood neutral at 59.34; it did not show any divergence against price. The daily MACD was bearish and remained below its Signal Line.

A Shooting Star occurred on the charts. This is a classical Shooting Star as Nifty opened high, inched higher before closing more towards its low point of the day. This type of candle can probably form a temporary top again and push the market into consolidation. However, as always, this will require confirmation on the next trading day.

Following two days of strong up move, chances are high that Nifty may slip into some consolidation. If the index extends its up move, it is likely to find strong resistance at 15,176 levels. From the options data as well, the level of 15,200 holds maximum Call OI as of now. From a technical perspective, the zone of 15,175-15,200 remains a critical resistance for the market to navigate in the immediate near-term.

(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)