Technical Analysis

The Nifty call: Go short in intra-day rallies

Yoganand D BL Research Bureau | Updated on September 06, 2018 Published on September 06, 2018

Nifty 50 September Futures (11,490)

The Sensex and the Nifty began the session on a positive note, but soon slipped into negative territory and turned choppy. Both the indices are range-bound with a negative bias. The market breadth of the Nifty index is biased towards declines. Apart from the Nifty Pharma index which has gained 1.3 per cent, other sectoral indices are trading in the negative zone. The volatility index, India VIX, has gained 2.6 per cent to 14.01 levels.

The Nifty September futures started the session with a gap-up opening at 11,547 levels. It extended its up-move and marked an intra-day high at 11,570 levels. However, after witnessing selling pressure at higher levels, the contract began to decline and breached key supports at 11,520 and 11,500 levels. The near term outlook is bearish for the contract.

Traders can make use of intra-day rallies to go short while maintaining a fixed stop-loss at 11,525 levels. Continuation of the down-move can make the index find support at 11,450 levels. A further fall below the base level can drag the contract lower to 11,425 and 11,400 levels in the short term. To alter the bearish view the contract needs to emphatically move beyond the significant resistance level of 11,520 levels. Next resistances are placed at 11,550 and 11,570 levels.

Strategy: Go short in intra-day rallies while maintaining a fixed stop-loss at 11,525 levels

Supports: 11,470 and 11,450

Resistances: 11,520 and 11,550

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