Tech View: Nifty charts hint at more trouble ahead. What traders should do on Friday

Nifty closed below the immediate support of 10-day EMA at 19,680, after sustaining above it for 21 consecutive sessions. “Further weakness from here, the market could slide down to its crucial lower support of 20-day EMA around 19,500 levels. This moving average has been offering support for the Nifty for the past three months,” said Nagaraj Shetti of HDFC Securities.

Both price and momentum indicators are suggesting that there could be some weakness in the short term. The daily Bollinger bands are also contracting, which points towards consolidation in the short term.

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

Rajesh Bhosale, Technical Analyst at Angel One
Going ahead, the profit booking may extend a bit and the support level of 19,500 (20-EMA) is likely to get challenged in this scenario. This average has proven to be a strong base during previous price corrections in May and June, resulting in significant positive momentum.

Therefore, it holds pivotal importance for the upcoming sessions as a break below it may lead to meaningful profit booking in days to come. On the other hand, today’s supply zone around 19,850 – 19,880 is expected to act as a stiff resistance, and only a breakthrough would trigger an upside momentum. The bulls have enjoyed a winning streak for four consecutive expiries, with July recording gains of more than 3.5%. This optimism is expected to persist, but the next leg of the upward move might not be as smooth as it has been. Hence, traders are advised to wait for some consolidation or a decent price dip before considering aggressive long positions.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The short-term trend of Nifty seems to have reversed down and more weakness could be in store for the coming sessions. There is a possibility of important cluster support for the market around 19,500-19,450 levels. Any rise from here could find strong resistance at 19850 levels.

Shrikant Chouhan, Head of Research (Retail), Kotak Securities
For traders now, 19,800 would be the key resistance zone, and below the same, the correction wave is likely to continue till 19,600-19,550. On the flip side, above 19,800 the market could rally to 19,875-19,900.

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