On Tuesday, a long bearish candlestick formed on the Nifty daily chart, almost erasing Friday’s gains. Technically, this market move indicates a lack of strength to sustain an upward rebound.
According to the daily chart, positive chart patterns like top and bottom are still alive and well, and downside support between 24,200 and 24,000 will be important. If Nifty can sustain above 24,200-24,000 levels in the next few sessions, the market could move higher significantly. Failure to maintain the above support could result in severe selling pressure on the market. Nagaraj Shetty of HDFC Securities said the immediate resistance level is at the 24,500 yen level.
In the open interest (OI) data, the highest OI on the call side was observed at strike prices of 24,500 and 24,400, while on the put side, the highest OI was at strike price of 24,300, followed by 24,350.
What should traders do? Analysts say:
Hrishikesh Yedve, Asit C. Mehta Investment Intermediates
Technically, the index formed a large red candle on the daily chart and broke through the 100-DEMA support near the 24,360 level, indicating weakness. However, Nifty is still consolidating within the 24,180-24,860 range and a breakout of either will decide the future movement of the index. For the time being, 24,180 will be a key support level. If the index remains below 24,180, weakness could extend to the 24,000-23,900 levels.
Rupak De, LKP Securities
Nifty plummeted due to the formation of a Harami pattern on a daily basis. The index is below the 21-EMA, indicating a growing bearish outlook in the market. Additionally, the indicator is in a bearish crossover, further confirming the negative sentiment. The short-term outlook remains weak, with a possible fall towards the first support expected at 24,200. If Nifty does not fall decisively below 24,200, we may see a meaningful recovery.
Praveen Dwarakanath, Hedged.in
Nifty fell over 1% on Tuesday and closed below the 20 EMA. However, until the Nifty support at 24,200 remains intact, we can continue to buy the bull by placing a stop loss at the support at 24,200 level. Immediate resistance for the index lies at the 25,200 level. The RSI line is below the RSI average line on the daily chart, indicating weakness in the index. The support at 24,200 is currently significant and a break above it could take Nifty closer to the 23,800 level. Monthly expiration data from options writers shows an increase in call writing above the 24,500 level, suggesting weakness in the index.
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