The formation of a high wave pattern on Wednesday and bearish engulfing pattern of Thursday indicates a short-term top reversal pattern, said Nagaraj Shetti of HDFC Securities, adding that both price and momentum indicators are suggesting weakness in the near term.
Now the index has to hold above 18,676 zones to witness an up move towards 18,777 and 18,888 zones while on the downside support exists at 18,636 and 18,550 zones, said Chandan Taparia of Motilal Oswal.
India VIX was down by 0.72% from 11.16 to 11.08 levels. Volatility was slightly down and is at overall lower levels causing premiums to squeeze. Option data suggests a broader trading range in between 18,450 and 18,900 zones while an immediate trading range in between 18,600 and 18,800 zones.
What should traders do? Here’s what analysts said:
Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas
The range of consolidation is likely to be 18,800–18,500. The 20-day moving average, which has been holding out during this rally, is placed at 18,532 and so only a decisive break below that shall reverse the trend. In terms of levels, 18,780 – 18,800 shall act as an immediate hurdle zone while 18,530 – 18,500 is the crucial support zone to watch out.As far as Bank Nifty is concerned, the index has decisively broken the consolidation range of 44,000 – 44,500 on the downside and is likely to head lower over the next few trading sessions. In terms of price pattern, the Bank Nifty has formed a Distribution Triangle pattern, which has been breached on the downside. On the downside, we expect the Bank Nifty to target levels of 43,000.
Rupak De, Senior Technical at LKP Securities
The Relative Strength Index (RSI) is showing negative divergence, indicating weakening bullish momentum. Over the near term, Nifty may decline towards the 18,550 level. On the higher end, there is resistance expected at the 18,750 level.
Shrikant Chouhan, Head of Research (Retail), Kotak Securities
Technically, a double-top formation on intraday charts and a bearish candle on daily charts is indicating temporary weakness in the markets. As long as the Nifty is trading below 18,765, the weak sentiment is likely to continue. Below the same, the index could slip till 18,600-18,550. However, a fresh uptrend could be seen only after the dismissal of 18,765 and could move up to 18,825-18,875.
(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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