Minor degree positive chart patterns like higher tops and bottoms have been negated recently as per the daily chart. Hence, any upside bounce from here is expected to be a lower top formation in the short term, Nagaraj Shetti of HDFC Securities said.
Derivative data implies a muted build-up in Nifty futures, with a marginal rise in Open Interest. Options data revealed writing at the 22,000 and 22,200 strike prices, steering signs of weakness.
The Relative Strength Index (RSI) has also displayed a bearish crossover, indicating mounting selling pressure.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan
On the daily charts, we can observe that Nifty has taken support around the 78.6% Fibonacci retracement level of the previous rise from 21530 – 22526. The momentum set up on the hourly time frame suggests exhaustion of selling pressure as there are signs of a positive divergence and is currently having a positive crossover. In terms of price pattern, the daily candle has taken form of a Doji pattern which suggests indecision among market participants regarding the direction as both bulls and bears are trying hard to defend their respective boundaries. This could lead to consolidation and the range could be 21700 – 22000.
Rupak De, LKP Securities
The overall sentiment remains negative as the index closed below the previous consolidation low. Additionally, the index ended the session below the critical moving average. However, a further fall is anticipated below the recent swing low on the hourly chart, which is positioned around 21700. On the higher end, resistance is placed at 21900-22000.
Tejas Shah, Technical Research, JM Financial & BlinkX
Nifty has formed a Doji candle on its daily chart which indicates indecisiveness prevailing in the marketplace. So we need to wait and watch, till the high (21,931) or low (21,710) of yesterday’s daily candle is taken out for further direction on nifty. The crucial support of 21,863 (50 Day EMA) was breached on a closing basis for two consecutive days which indicates that the weakness is likely to continue. Technically, the evidence continues to suggest that the markets are likely to remain under pressure in the near term. Support for the Nifty is now seen at 21,700 and 21,500-550 levels. On the higher side, immediate resistance for Nifty is at 22,000 Mark and the next resistance zone is at 22,200-250 levels.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
