Headline index Nifty on Thursday formed a lower top formation on intraday charts and also formed a bearish candle on daily charts as it closed below its 10-DMA for the second consecutive day.

On the hourly charts, Nifty faced resistance around the key hourly moving averages. Today’s bear candle has engulfed the previous negative candle of Wednesday. Technically, this overlapping candle pattern signals a lack of strength in the market to sustain the highs, said Nagaraj Shetti of HDFC Securities.

Chartists said confirmation of strength could be seen only above the key hurdle at the 18473 mark.

What should traders do? Here’s what analysts said:

Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The recent swing high of 18458 level could now be considered as a new higher top of the sequence, and the current weakness seems to be in line with the new higher bottom formation as per the daily time frame chart. At the lower levels, Nifty is expected to find support around 18000-17950 levels before showing an upside bounce from the lows in the next 2-3 sessions.

Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas
Going ahead, 18300-18350 shall act as a stiff resistance. On the way down, the index is approaching the crucial support of 18079, which coincides with the 20-day moving average, and below that lies the psychological support level of 18000.
So on the downside, there are multiple support parameters that shall provide cushion and restrict a deep correction. Stock-specific action can take place over the next few trading sessions. The daily momentum indicator has a negative crossover which is a sell signal. Thus, considering the above, we have changed our outlook sideways, and the range of consolidation is 18400-18000.

Rahul Ghose, Founder & CEO – Hedged
Nifty has now tilted towards the short side, with the number of calls being written for the monthly expiry of May having become significantly higher than that of the put side. The support zone in Bank Nifty is still intact, though between 43500 and 42800. This should still give us a move towards the all-time high levels. For Nifty, as long as the highest put writers are at the 18000 level, this will act as strong support, and one should become bearish only below the 17800 level.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities
The market texture is weak, and the 20-day SMA (Simple Moving Average) or 18050 would be the immediate support zone for the bulls. On the other hand, 18200 could act as an immediate resistance zone for the traders, above which the index could retest the level of 18280-18300.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)


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