Nifty has engulfed the gains of the last four sessions but somehow managed to hold the support zone of the short-term moving average (20 EMA). The close indicates more pain ahead and can gradually inch towards the 21,200-21,450 zone. We thus suggest reducing existing longs on the bounce and looking for shorting opportunities as well, said Ajit Mishra of Religare Broking.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan
The ideal strategy to trade this fall would be to sell on a rise near the resistance zone (21800 – 21820). On the downside, we expect the index to target levels of 21167 which is the 40-day moving average, and below that it can slip towards 20870 which is the 38.2% Fibonacci retracement level of the rise the Nifty has witnessed from 18837 – 22124.
Rupak De, LKP Securities
Nifty witnessed a significant decline driven by profit-taking following its record high of 22,124 in the previous trading session. Wednesday’s profit booking led the index to the 21-day Exponential Moving Average, a crucial short-term moving average. Sentiment could potentially deteriorate further if the Nifty drops below 21,550, where the 21EMA is situated. On the downside, a breach of 21,550 may result in the index descending towards 21,350. Conversely, on the upside, resistance is observed at 21,650.
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