Technical Analysis

Nifty call: Go long on rally above 14,250 levels with fixed stop-loss

Yoganand D | Updated on January 06, 2021

Nifty 50 January futures (14,238)

The Sensex and Nifty 50 began Wednesday’s session on a positive note amid weak Asian markets. The Nikkei 225 has slipped 0.38 per cent to 27,055 and the Hang Seng index is trading flat at around 27,632 levels.

Though the domestic benchmark indices started the session on a positive note, they immediately slipped into negative territory and are wavering between positive and negative territory. Yet, the market breadth of the Nifty 50 is biased towards advances.

Volatility index, India VIX, has climbed 0.3 per cent to 20.5 levels. The Nifty midcap and smallcap indices have climbed 1.2 per cent and 0.86 per cent respectively. The Nifty FMCG and Pharma are hovering in negative territory and are down by 0.5 per cent and 0.1 per cent respectively. Buying interest is seen in the Nifty media, realty and PSU Bank indices that have advanced between 1-1.6 per cent.

Following a positive open at 14,249, the Nifty 50 January month contract marked an intraday high at 14,252 and then slipped to register an intraday low at 14,195. But the contract bounced up from the intraday low and is now trading at around 14,242 levels. The contract is likely to test resistance at 14,250 levels. A strong rally above this level can take it higher to 14,275 and then to 14,300 levels.

Traders can take long positions above 14,250 levels with a fixed stop-loss. But a strong plunge below the immediate base level of 14,200 can bring back selling interest and pull the contract down to 14,170 and then to 14,150 levels. Next supports are at 14,125 and 14,100 levels.

Strategy: Go long on a strong rally above 14,250 levels with a fixed stop-loss

Supports: 14,200 and 14,170

Resistances: 14,250 and 14,275

Published on January 06, 2021

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