Trade Setup: Nifty may try to test 11,700 level amid weekly expiry

The domestic equity market had a positive session on Wednesday, as Nifty went on to extend its gains after half a day of consolidation. The market saw a positive start to the session and traded with capped gains in the morning session. At one point, after trading in defined range, Nifty gave up the gains to trade flat by afternoon. However, the market picked up pace in the second half and Nifty not only recouped the morning losses but also got stronger as the session progressed. Moving past the psychological mark of 11,600, the index maintained its gains until the end of the session.

The headline index ended the day with a net gain of 82.75 points, or 0.72 per cent. As the market ended near the high point of the day, there are chances that Nifty would extends its gains at least in initial trade on Thursday. Nifty now trades well above the Double Top resistance point at 11,430. This level has now become the short-term support for the market followed by the 50-DMA, which currently stands at 11,235. Nifty has raised its support to 11,430 level for the near term following Wednesday’s move. Volatility continued to decline; and INDIA VIX came off 4.55 per cent to 19.6600.

On Thursday, the 11,665 and 11,700 level are likely to pose resistance for Nifty, while supports will come in at 11,490 and 11,430 levels.

The Relative Strength Index, or RSI, on the daily chart stood at 61.90. It continued to be neutral and did not show any divergence against price. The daily MACD remains bearish, as it trades below the signal line. However, the sharply narrowing slope of the Histogram pointed towards a likely positive crossover in the coming days.


A White Body emerged on the candles ,which signalled a bullish trend during the day. Pattern analysis showed Nifty is attempting to move past the Double Top resistance level. It has taken out this level after failing in its first attempt. The second attempt has moved the immediate short-term support for the index higher to 11,430 level.

Weekly option contracts expire on Thursday and the 11,700 level holds maximum Call Open Interest. So, if we do not have any overnight negative cues to deal with, Nifty may try to test the 11,700 level. The 11,500 level holds the highest Put Open Interest, which shows that unless there is any tactical shift in positions, Nifty may not go below these levels. Given the current technical setup, Nifty is likely to stay and trade in a defined range in the coming session. We recommend approaching the market with a selective approach.

(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)