Tech View: Nifty breaks below 100-DMA. What traders should do on Wednesday

Nifty today ended 261 points lower to fall below its 100-DMA and form a long bear candle on the daily chart.

The short-term trend of Nifty continues to be negative. Having moved below the support of 19,330, one may expect the Nifty to slide down to 18,825 levels-200 day EMA in the near term. Any attempt of upside bounce could encounter resistance around 19,400 levels, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

In terms of Open Interest (OI) data, the highest OI on the call side was observed at 19,600, followed by the 19,500 strike prices. On the put side, the highest OI was at the 19,000 strike price.

The market will be closed on Tuesday on account of Dussehra.

What should traders do? Here’s what analysts said:

Jatin Gedia, Sharekhan by BNP Paribas

On the daily charts, we can observe that the Nifty has breached the previous swing low of 19333 it touched in the first week of October and has closed below that indicating a breakdown. Weekly, daily, and hourly momentum indicators have a negative crossover which is a sell signal. Thus, both price and momentum indicators suggest a further decline. On the downside, Nifty is likely to drift towards 19,000 from a short-term perspective. On the way up 19,500 – 19,530 shall act as an immediate hurdle zone as per the principle of role reversal.Shrikant Chouhan, Kotak Securities

For day traders, 19,400 would be the key resistance level, below which the index could slip till 19,200-19,175. On the other hand, above 19,400 we could see a quick technical bounce back till 19,450-19,500.

Kunal Shah, Senior Technical & Derivative analyst at LKP Securities

The bears have maintained a strong grip on the index, resulting in significant selling pressure. This pressure led to a breakdown of the key support level at 19,500. With the support at 19,500 breached, the next significant support level was at 19,200. If the index fails to sustain above this level, it may experience further declines toward the 19,000-18,800 range.The overall sentiment for the index remains bearish. As long as the index stays below the 19,600 mark, the view remains bearish, and any upward movements are viewed as selling opportunities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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