Nifty on Friday formed indecisive candles on the daily and weekly charts. Analysts said the 50-pack index has faced strong resistance at the 17,800 level, even as it remains well above its supports. The trend is likely to be sideways to positive in the near term, they said, adding that a breach from the 17,700 level could cause some weakness to the 17,500 level.
Independent analyst Manish Shah said the trend-following indicators are still showing an upward trend. “Over the past four days, Nifty has been trading in a narrow band of 17,850-17,650. A break above 17,850 will lead Nifty to 18,000-18,100,” he said.
Rupak De, Senior Technical Analyst at LKP Securities, said the index has not shown any directional move and the trend could continue sideways to positive. On the downside, supports are visible at 17,700 and 17,550 levels, he said.
On Friday, the index closed at 17,786.80, an increase of 49.85 points or 0.28 percent. For the shortened week, the index was 1.2 percent higher.
Angel One’s Sameet Chavan said the market failed to capture all of its lead as the 50-pack index saw challenges around 17,800. On the other hand, the bulls were able to successfully defend 17,600, narrowing the weekly range to just 200 points, he noted.
“The market has chosen to take a breather before the next leg of the rally unfolds. As for the support, 17,600-17,500 are considered key levels and so far there is no reason to worry. “It’s only a matter of time, we’d see Nifty surpass 17,800 to retest the psychological node of 18,000,” Chavan said.
Gaurav Ratnaparkhi, chief of technical research at Sharekhan, said the 50-pack index was trading near the 78.6 percent retracement of its entire September decline.
The key Fibonacci level is near 17,800, he said, noting that Nifty did not extend beyond the level despite breaching it on an intraday basis on Friday.
“The hourly chart shows that the index is in the process of forming a distribution near this major hurdle. The hourly momentum indicator has developed a negative divergence, which is a sign of exhaustion. The immediate support zone is at 17,720-17,700. breached, the index could fall towards 17500 in the near term,” Ratnaparkhi said.