Normally, such pattern formation after a reasonable decline or up move is a signal impending reversal post confirmation. Having shown a decent upside bounce from the lows in the last few sessions, the odds of reversal from the highs are likely, said Nagaraj Shetti of HDFC Securities.
Volume profile indicates Nifty has strong support around the 19,300-19,400 zone. OI data showed that on the call side, the highest OI was observed at 19,700 followed by 19,800 strike prices while on the put side, the highest OI was at 19,500 strike price. On the other hand, Bank Nifty has support at 44,500-44,600 while resistance is placed at 45,200-44,350 levels.
What should traders do? Here’s what analysts said:
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas
Nifty has overlapped the swing low of 19,563 and as a result, the fall is no longer impulsive in nature. The pullback still appears corrective in nature and this is unlikely to sustain at higher levels. It has reached the 61.82% Fibonacci retracement level (19605) of the fall from 19,795 – 19,296, which is likely to provide resistance. Also, the hourly momentum indicator has reached the equilibrium line, indicating that the pullback has matured and can start a new cycle. Overall, we still shall continue to maintain our negative stance on the Nifty, and we expect levels of 19, 100 from a short-term perspective.
Rupak De, Senior Technical analyst at LKP Securities
Nifty demonstrated resilience as it predominantly remained strong, reclaiming its position above the 21-day Exponential Moving Average (21EMA) after a brief dip below this critical average. Going forward, the level of 19,500 is expected to serve as immediate crucial support. The market’s upward momentum is likely to persist as long as Nifty maintains its position above this support level. On the upper end, potential resistance can be anticipated around the range of 19,700 to 19,750.
Osho Krishan, Angel One
The overall trend seems upbeat as the index hopped over the 20-SMA again. As far as levels are concerned, the bearish gap of 19,678-19,705 is the crucial hurdle, and it requires an authoritative breach to turn the sentiments to ultra bullish once again. On the flip side, the pivotal support of 19,500 is supposed to cushion any intra-day blip, while strong support lies around the 19,400-19,380 zone in the near period.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)