Technical Analysis

Nifty Call: Tread with caution as contract tests key resistance band

Yoganand D, BL Research Bureau | Updated on May 10, 2019 Published on May 10, 2019

Nifty 50 May Futures (11,340)

Taking mixed cues from the Asian markets, the Sensex and the Nifty began the session on a marginally positive note and turned volatile thereafter. The Nikkei 225 fell slightly by 0.3 per cent to 21,344 whereas Hang Seng index gained 1.1 per cent to 28,626 levels in today's session.

Both the indices continue to hover in the positive territory amid choppiness. The market breadth of the Nifty index is biased towards declines. The India VIX index gained 1.2 per cent to 25.8 levels. The large-cap indices are witnessing selling pressure, the Nifty Next 50 index has slipped in to negative territory.

The Nifty metal index has declined 1.7 per cent and Nifty IT index has fallen 0.8 per cent. On the other hand, buying interest is seen in Nifty media and PSU bank indices which have gained almost 1 per cent each.

The Nifty futures contract began the session at 11,329 levels. After recording an intra-day low at 11,296 the contract took support at around 11,300 and bounced up. It has marked an intra-day high at 11,371 levels. The contract faces difficulty in surpassing key resistance in the band between 11,365 and 11,375.

A strong break above this band is required to strengthen the bullish momentum and take the contract higher to 11,400 levels. A further rally above 11,400 can extend the rally to 11,425 and 11,450 levels.

On the downside, an emphatic fall below the key base level of 11,300 will bring back selling pressure and drag the contract down to 11,275 and 11,250 levels. Traders should tread with caution as long as the contract trades below the key resistance band.

Strategy: The contract tests a key resistance band. Tread with caution

Supports: 11,300 and 11,275

Resistances: 11,375 and 11,400

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