Technical Analysis

Nifty call: Tread with caution as the index is testing a critical resistance

Akhil Nallamuthu | Updated on October 22, 2019

BL Research Bureau

Nifty 50 October Futures (11,660)

In a truncated trading week, the Nifty opened the session lower after moving up in the initial minutes. It tested the critical resistance of 11,700 levels where it faced selling pressure and slid downwards. The index is now trading lower by 0.2 per cent. The Sensex too moved similar to the Nifty and is down by 0.3 per cent. However, Asian indices are showing a positive bias. Nikkei is up by 0.3 per cent and Hang Seng is trading higher by 0.4 per cent.

Contrary to Nifty’s movements in early trade, the stocks that constitute it are giving a different picture. Out of the 50 stocks, 40 have gained today, which is a significant bullish sign. Volatility has shot up today by 3.5 per cent as indicated by the volatility index, India VIX, which is at 16.4 level. Barring the Nifty IT index, all sectoral indices are in green. The Nifty media index is the top performer by gaining 1.5 per cent today. Nifty IT index is down by a little over 4 per cent.

After gaining for past two weeks, the October futures contract of the Nifty 50 index is facing a key resistance at 11,700. Considering that the trend is bullish, traders must apply caution and wait for the breakout. But below 11,630, the futures look weak and might attract more sellers. Hence, traders are advocated to tread with caution and initiate long positions if the futures price moves past 11,700.

Strategy: Tread with caution as the index is testing a critical resistance

Supports: 11,630 and 11,566

Resistances: 11,700 and 11,745

Published on October 22, 2019

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