Nifty has now formed a double-top formation on daily and intraday charts and a bearish candle on daily charts, indicating further weakness from the current levels.
The Futures Open Interest (OI) in the Nifty indicated a buildup of fresh short positions in index futures. Call writers were seen offloading their positions at the 19,800 strike, leading to a strong down in Nifty today. A double-top structure around the 19,850 levels is visible on the daily chart. A breakdown below the previous swing low of 19,635 can intensify the selling pressure, which can take the index to 19,480 levels, said Ashwin Ramani, Derivatives and Technical Analyst, SAMCO Securities.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan by BNP Paribas
On the daily charts, we can observe that Nifty has faced resistance from around the 61.82% Fibonacci retracement level (19,850 – 19,885). On account of the correction, Nifty has now reached the zone of 19,670 – 19,640 where support in the form of 20- and 40-day moving averages are placed. Bollinger bands are contracting, indicating that consolidation is likely over the next few trading sessions. In terms of levels, 19,640 – 19,600 shall act as crucial support and 19,770 – 19,800 is an immediate hurdle zone for the index.
Shrikant Chouhan, Head of Research (Retail), Kotak Securities
As long as the index is trading below 19,800, the weak sentiment is likely to continue and could slip to 19,600-19,575. On the flip side, a minor pullback rally is possible if the index surpasses the intraday resistance of 19,720 and above the same, we could see a quick intraday rally till 19,780.Rupak De, LKP Securities
Nifty found resistance at 19,850, which led to a fall towards 19,650. Going forward, the index may witness a rangebound move until it breaks out in either direction. A fall below 19,650 might give bears more strength and the Nifty might fall down towards 19,250. On the higher end, a decisive move above 19,850 might open the way towards 20,200.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
