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Sensex and Nifty 50 are managing the hold higher. Both the indices are trading in green. Sensex is up 0.47 per cent and is trading at 55,808. Nifty is at 16,680, up 0.3 per cent for the day. However, crucial resistances are ahead for the indices which can cap the upside from here. 16,750-16,800 on the Nifty and 56,250-57,000 on Sensex are the crucial resistances to watch. Inability to break above these resistances can trigger a fresh fall from here.
In Asia, barring the Nikkei 225 (25,408, up 0.98%) other major indices trading in red. Shanghai Composite (3,271), Hang Seng (19,858) and Kospi (2,644) are down in the range of 06-3.4 per cent. The spike in covid cases in China is keeping the Asian indices under pressure.
In the US, the Dow Jones Industrial Average (32,944) has closed below the key 33,000 level. The bias is bearish to see a test of 32,000 and even 31,000 in the coming days. A strong rise past 34,500 is needed to turn the sentiment positive. The US Federal Reserve meeting outcome on Wednesday will be an important event to watch this week.
Futures: The Nifty 50 March (16,723) is up 0.45 per cent. Cluster of resistances are poised in the broad 16,750-16,820 region. The bias remains negative. As such we expect the contract to reverse lower anywhere from the 16,750-16,820 region. Such a versal can take the contract down to 16,500-16,450 initially. A break below 16,450 will then drag the contract down to 16,250 and 16,000 eventually.
Traders can go short on a rise at 16,780 and accumulate at 16,810. Keep the stop-loss at 16,890. Trail the stop-loss down to 16,640 as soon as the contract falls to 16,580. Move the stop-loss further down to 16,610 as soon as the contract touches 16, 560. Book profits at 16,540.
The bearish outlook will go wrong if the contract breaks above 16,820 decisively. In that casn the contract can rise to 17,000 and then see a reversal.
Trading Strategy: Go short on a rise to 16,780 and then at 16,810. Keep the stop-loss at 16,890 for the target of 16,540. Trail the stop-loss down to 16,640 as soon as the contract falls to 16,580. Move the stop-loss further down to 16,610 as soon as the contract touches 16, 560.
Supports: 16,450 and 16,250
Resistances: 16,750 and 16,810
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