Technically, this pattern indicates a side-by-side bull candle-type pattern, but the placement of the pattern is not ideal. Hence, one may expect a minor upside bounce from here, but the sustainability of this bounce could be a big question on the market, said Nagaraj Shetti, HDFC Securities.
Volume profile indicates Nifty has strong support around the 19,250-19,300 zone. Coming to the OI data, on the call side, the highest OI was observed at 19,600 followed by 19,500 strike prices while on the put side, the highest OI was at 19,300 strike price. On the other hand, Bank Nifty has support at 43,400-43,500, while resistance is placed at 44,600-44,800 levels which are also close to 50 and 20-day EMA levels, respectively.
What should traders do? Here’s what analysts said:
Rupak De, Senior Technical analyst at LKP Securities
The short-term outlook remains feeble, given that the index concluded the session below the vital short-term moving average (21-EMA). The Relative Strength Index (RSI) shows a bearish crossover, further amplifying the pessimistic sentiment. The prevailing trend will continue to lack strength as long as it maintains levels below 19,521, where the 21-EMA is situated. Looking downward, the initial support level is positioned at 19,250.
Nagaraj Shetti, HDFC Securities
The negative chart pattern like lower tops and bottoms is intact. Having formed a new lower bottom at 19,257 on Monday, the odds of Nifty forming another lower top could be high in the short term. Currently, the strong cluster resistance is placed around 19,550-19,600 levels (down-sloping trend line, daily 10/20 day EMA) and one may possibly expect weakness from the highs for this week. Immediate support is placed around 19,250-19,300 levels.
Shrikant Chouhan, Head of Research (Retail), Kotak Securities
Technically, the bullish candle on daily charts and higher bottom formation on intraday charts are indicating a further uptrend from the current levels. For the trend-following traders, 19400 would be the key level to watch out for, and above the same, the market could move up to 19,550-19,575. On the flip side, a fresh sell-off could be seen after the dismissal of 19400. Below this the index could retest the level of 19,350-19,300.
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas
On the daily charts, we can observe that the index has taken support at the 40-day moving average and daily lower Bollinger band (19360 – 19330). On the upside, the Nifty is facing stiff resistance at the key hourly moving averages (19450 – 19500). Thus the index is consolidating between these two parameters. The daily and hourly momentum time frame is also providing divergent signals. Under such a situation a consolidation is highly likely. Overall, there are no signs of a trend reversal, and hence the short-term outlook is negative. On the downside we expect the Nifty to target levels of 19,100.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)