Tech View: Dark cloud cover pattern seen on Nifty charts. What traders should do next week

Option data suggest a shift in lower trading range between 18,500 and 19,000 zones while an immediate trading range between 18,550 and 18,800 zones.

The Relative Strength Index (RSI) indicates negative divergence, indicating a weakening bullish momentum. The immediate support of daily 10-day EMA has been broken on the down side at 18,730 and Nifty tested another support of 20-day EMA around 18,650 levels.

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

Rupak De, Senior Technical at LKP Securities
Looking at the support levels, there is visible support at 18,500, and if the index breaks below this level, it could potentially drop towards 18,200. On the other hand, there is resistance at 18,800 on the higher end of the index.

Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas
On the weekly charts, we can observe a negative close after 4 consecutive weekly gains. Also, considering the broader market, the midcap and smallcap indices have witnessed correction in the past couple of trading sessions. Overall, weakness has crept in and the wait for a new all-time high gets longer. We would still await further validations on the price to change the trend. In terms of levels, 18,650 – 18,600 shall act as a crucial support zone while 18,880 – 18,900 shall act as a crucial resistance zone.

As far as Nifty Bank is concerned, the 20-day moving average of 43,976 acted as a stiff resistance and the index was unable to surpass it. The banking index is still stuck in a range and until the zone of 44,000 – 43,500 is not decisively breached on either side the range-bound action is likely to continue.Amol Athawale, Technical Analyst (DVP), Kotak Securities
For traders, 20-day SMA (Simple Moving Average) or 18,650 would act as a sacrosanct support level. If the index trades above the same then it could retest the level of 18,880 and move up to 19,000. Below the 20-day SMA or 18,650, the market could slip till 18,500-18,450.

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