Technically, the index on a daily scale index has formed a red candle, indicating weakness. Furthermore, the index has decisively broken its 200-day exponential moving average (DEMA) support level of roughly 23,540, said Hrishikesh Yedve of Asit C. Mehta Investment Interrmediates.
Thus, 23,540-23,550 will serve as an immediate barrier for the index. On the downside, the 50-weekly simple moving average (WSMA) is placed near 23,300 levels, which will serve as the short-term support for the index. Overall, the short-term trend is down, but the index is expected to consolidate in the narrow band of 23,300-23,600, Yedve added.
In the open interest (OI) data, the highest OI on the call side was observed at 23,500 and 23,600 strike prices, while on the put side, the highest OI was at 23,400 strike price followed by 23,300.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan
On the daily charts, we can observe that the index has closed in the negative for the seventh consecutive trading session, more importantly below the 200 DMA (23,565) indicating weakness. Divergent signals from daily as well as hourly momentum indicator is resulting in intraday volatility however the trend continues to remain negative and hence minor degree pullback towards the 20-hour moving average (23,552) should be used as a selling opportunity. On the downside, we are expecting 23,180, which coincides with the 61.82% Fibonacci retracement level.
Praveen Dwarakanath, Hedged.in
Nifty tested its crucial support at 23,350 levels today, a break that can take the index down to the 22,800 levels. The momentum indicators on the daily chart show positive divergence, indicating a possible dead cat bounce towards 23,800 levels before November expiry, however, it can be used as an opportunity to sell the index. Options writer’s data for the monthly expiry showed an increase in call writing in 23,500 levels, indicating weakness to continue.
Rupak De, LKP Securities
Nifty exhibited some volatility during the day, slipping near a historical congestion level on the daily timeframe. On the daily chart, the index has been trading below the 200-day moving average (DMA) for the past two sessions. The RSI has entered the oversold zone, accompanied by a bearish crossover. While the overall chart setup remains weak, the selling pressure appears to have eased following a prolonged correction. In the short term, the index may recover towards 23,700–23,800. On the downside, support is positioned at 23,200–23,300.
Tejas Shah, JM Financial & BlinkX
Technically, it is quite apparent that the market is facing selling pressure at higher levels. Most technical indicators are still in sell mode and are unlikely to reverse in a hurry. However, with a large waterfall decline in the last few days, some studies have once again turned oversold and hence could trigger a minor pullback rally from the support levels. Support for Nifty is now seen at 23,350 and 23,200. On the higher side, the immediate resistance zone for Nifty is at 23,600-650 levels and the next resistance is at around 23,800 Mark.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)