Technical Analysis

The Nifty call: Wait for a bounce and go short at 10,875 and 10,895

Gurumurthy K BL Research Bureau | Updated on January 01, 2019 Published on January 01, 2019

Nifty 50 January Futures (10,860)

The Indian benchmark indices have begun the new year on a weak note. The Nifty 50 futures contract opened with a slight gap-down and moved up to make an intra-day high of 10,929.9. However, it failed to sustain higher and has come-off sharply from 10,929 to make a low of 10,843.2. It is currently hovering above the day’s low at 10,860.

The intra-day price action over the last couple of days indicate that the contract is lacking fresh and strong follow through buyers to breach the psychological level of 11,000. The subsequent fall below 10,900 has turned the outlook bearish for the index futures. The region between 10,900 and 10,910 will be a strong resistance. Intermediate bounce to this resistance zone is likely to find fresh sellers coming into the market.

Support is at 10,840 which is holding as of now. An eventual break below it can drag the index futures lower to 10,810 and 10,800 in the coming sessions.

Traders can wait for a bounce and go short at 10,875 and 10,895. Stop-loss can be placed at 10,915 for the target of 10,805. Revise the stop-loss lower to 10,860 as soon as the contract moves down to 10,845.

Strategy: Go short on a bounce at 10,875 and 10,895 with a stop-loss at 10,915

Supports: 10,840, 10,800

Resistances: 10,910, 10,930

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