The hourly momentum indicator has also reached the equilibrium line indicating that the pullback has matured and can begin a new cycle on the downside, said Nagaraj Shetti of HDFC Securities.
Nifty Futures Open Interest (OI) indicated a build-up of fresh long positions. “50-DEMA for Nifty is placed at 19,175, which is likely to act as a support for Nifty going forward. Nifty has been moving in a lower high lower low formation since 27th July. A strong close above 19,600 and the 20-DEMA is likely to ignite buying interest again,” Samco Securities said.
What should traders do? Here’s what analysts said:
Rahul Ghose, Founder & CEO – Hedged
Nifty is likely to be in a sell-on-rally mode until the 19,660 level gets taken out decisively. Although options data for calls and puts are evenly distributed, the ferocity of the fall has made the index biased turn towards the downside barring the level mentioned. For Bank Nifty, the level to watch out for is 45,550, until this gets taken out, all rallies will get sold into just like Nifty. Once these levels get taken out, a short covering rally can start in the Indexes once again back to the 20,000 and the 46,500 levels.
Amol Athawale, Kotak Securities
Technically, we could see promising pullback rallies if Nifty trades above 19400, and on a further upsurge, it could move up to 19,600 or 20-day SMA. Further upside could lift the market to 19,700. On the flip side, below 19,400 the selling pressure is likely to accelerate. Below this, the index could slip to 19300-19250. After a sharp correction, the Bank Nifty took support near the 50-day SMA and bounced back sharply. For traders, 50-day SMA or 44500 would be the sacrosanct support level. Above this, it could rally till 20-day SMA or 45,400-45,500. On the flip side, below 44,500, the uptrend would be vulnerable and below the same, it could retest the level of 44,300-44,000.
Rupak De, Senior Technical analyst at LKP Securities
The recent fall has pulled the index below the 21-day exponential moving average (EMA) for the first time since March 29. On an immediate basis, 19,300 have acted as support. However, on the higher end, 19,566 is likely to act as a crucial resistance level. The sentiment is likely to remain weak as long as the Nifty remains below 19,566. However, a decisive move above 19,566 could take the index towards 19,700-19,750. On the other hand, a failure to move above 19,566 could trigger selling pressure.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)