NSEI unable to break through key resistance level
NIFTY 50 Index (NSEI) Technical Analysis Report for Sep 17, 2020 | by Techniquant Editorial Team
NSEI ended Thursday at 11516.10 losing INR88.45 (-0.76%). Trading INR47.80 higher after the open, the index was unable to hold its gains as the bears took control ending the day below its opening price. Closing below Wednesday's low at 11516.75, the Nifty confirmed its breakout through the previous session low after trading up to INR18.25 below it intraday.
Daily Candlestick Chart (NSEI as at Sep 17, 2020):
Thursday's trading range has been INR88.70 (0.77%), that's slightly below the last trading month's daily average range of INR129.62. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for NSEI.
Unable to break through the key technical resistance level at 11584.95 (R1), the stock index closed below it after spiking up to 11587.20 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. After having been unable to move lower than 11516.75 in the prior session, the market found buyers again around the same price level today at 11498.50. The last time this happened on August 25th, NSEI gained 0.67% on the following trading day.
Though NIFTY 50 is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could accelerate should prices move above the close-by swing high at 11618.10 where further buy stops might get activated. Selling could speed up should prices move below the nearby swing low at 11383.55 where further sell stops might get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing High" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for NIFTY 50. Out of 620 times, NSEI closed higher 55.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 60.48% with an average market move of 0.46%.