Technical Analysis

Gurumurthy K | BL Research Bureau | Updated on: Jun 09, 2022

Resistances are ahead and so the current bounce could be short-lived

Sensex and Nifty 50 are attempting to bounce back after opening with a gap-down today. Sensex and Nifty have risen back well recovering all the loss from their lows of 54,510.05 and 16,246.10. Both the indices are now trading flat. Sensex is at 54,904 and Nifty is trading at 16,359.

Resistances are ahead and so the current bounce could be short-lived. 16,400-16,450 on the Nifty and 55,000-55,200 on the Sensex can be a good resistance that can cap the upside. The indices are likely to reverse lower again after testing the above-mentioned resistance.

In Asia, barring the Nikkei 225 (28,322.22, up 0.31 per cent) other indices are trading in red. Shanghai Composite (3,247.86), Hang Seng (21,961.60) and Kospi (2,619.14) are down in the range of 0.24-0.5 per cent. In the US, the Dow Jones Industrial Average (32,910.9, down 0.81 per cent) continues to oscillate in a sideways range and remains mixed.

Futures: The Nifty 50 June (16,372) Futures has recovered all the loss after opening with a gap-down at 16,278. It made a low of 16,268 and has risen back well from there. Resistance is at 16,400 and 16,460. We can expect the upside to be capped from here. A reversal either form 16,400 itself or from 16,460 will drag the contract down to 16,200 in the coming sessions.

Traders can consider taking positional trades at the moment. Go short at 16,390 and then accumulate shorts at 16,430. Keep the stop-loss at 16,480. Trail the stop-loss down to 16,370 as soon as the contract falls to 16,290. Move the stop-loss further down to 16,280 as soon as the contract touches 16,240 on the downside. Book profits at 16,220.

The contract will have to see a sustained break above 16,500 to ease the downside pressure and move up further. But such a strong rise looks less probable.

Trading strategy: Go short at 16,390 and 16,430. Keep the stop-loss at 16,480 for the target of 16,220. Trail the stop-loss down to 16,370 as soon as the contract falls to 16,290. Move the stop-loss further down to 16,280 as soon as the contract touches 16,240 on the downside.

Supports: 16,300 and 16,200.

Resistances: 16,400 and 16,460.

Published on June 09, 2022