As Nifty closed below 17,800 on Friday, the headline index formed a Hammer-like candlestick formation on the weekly charts, signaling indecision between bulls and bears.
Nifty was trading near the 78.6% retracement of the entire September decline. The main Fibonacci level is near 17800. The hourly chart shows that the index is in the process of forming a distribution at this major hurdle. The hourly momentum indicator has developed negative divergence, which is a sign of exhaustion, Gaurav Ratnaparkhi, head of technical research, Sharekhan said by
The index traded above 21 DMA, making prices bullish.
What should traders do? Here’s what analysts said:
Rupak De, Senior Technical Analyst at
The consolidation continued as the index failed to provide direction. On the daily timeframe, the index has held up above the crucial moving average, confirming the uptrend in the near term. In the short term, the trend may remain sideways to positive. At the bottom, support is visible at 17700/1750; resistance at the top is placed at 17850/17950.
Manish Shah, Independent Trader and Coach Trend following indicators are still showing a fundamental uptrend. Over the past 4 days, Nifty has been trading in a narrow band of 17850-17650. A break above 17850 will lead Nifty to 18000-18100. The crucial level to watch out for is if the Nifty will break above 18000-18100 and how the market will behave in that area.
Ajit Mishra, VP – Research, Broking We may see further consolidation in the index and also expect a similar trend on the global front. Following the recent outperformance, the banking sector may also be taking a breather and index majors from other sectors are likely to fill the gap. Participants should maintain their focus on sector/stock selection and use dips to add during consolidation.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas The overall structure shows that the next step down could be just around the corner. The direct support zone is at 17720-17700. Once that is broken, the index could fall towards 17500 in the near term.
Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities Technically, the Nifty faces constant resistance between 17800 and 17850 levels. The 17800 level would act as a key resistance zone for traders, above which the index could rise as high as 18000-18100. On the downside, below 17600, selling pressure is likely to increase and the 50-day SMA (simple moving average) or 17500 could be retested. Further downward pressure could drag the index as high as 17400.
Prashanth Tapse – Research Analyst, Senior VP (Research), Mehta Equities Markets raced ahead as bulls were seen enthusiastically with immediate intermediate goal posts for Nifty seen at the psychological level of 18000. Above 18000 benchmark Nifty will aim for its all-time high at 18605. Immediate hurdle is seen at 18100 while support is seen at 17407-17589.
(Disclaimer: Recommendations, suggestions, views and opinions of the experts are their own. They do not represent the views of Economic Times)