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We have an expiry of weekly options on Thursday. The price action of Nifty against the 12,200 level will be key, as 12,200 and 12,100 strikes have near similar high Put open interest builtup. While, 12,300 has the maximum Call open interest builtup.
In the event of the index slipping below 12,200, we may see this level acting as resistance. Apart from this, another level to watch would be 12,100, which has formed a vital pattern support level.
Thursday’s session is likely to see 12,245 and 12,280 levels act as resistance. Support may come in at 12,150 and 12,100.
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The Relative Strength Index (RSI) on the daily chart stood at 54.85, and it remained neutral, showing no divergence against the price.
The daily MACD was bullish and it traded above its signal line. No important formations were noticed apart from a white body on the candles.
As per pattern analysis of the daily chart, Nifty has again moved into the broadening formation, which has become a broad trading range for the index. While doing so, it has averted any major decline by moving past the 50-DMA, which presently stands at 12,123.
Looking at the past two sessions, the only concerning factor is that the entire rally has come on the back of heavy short covering. It would be essential to see if this gets replaced with fresh buying.
We would recommend traders to continue using upmoves to protect profits and adopt a cautious view on the market.
(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)
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