He said Nifty is now placed near the crucial support of 17,450-17,500 levels and that there is no sign of any reversal pattern unfolding at the lows. A new swing low has been formed at 17,421 levels.
Chart readers said the current set-up is likely to keep Nifty under pressure, with a potential downside towards 17,150–17,200 over the short term. On the higher end, crucial resistance is placed at 17,800.
What should traders do? Here’s what analysts said:
Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas
Nifty is trading around the crucial support trendline derived at by joining the previous couple of swing lows. On the hourly charts, a positive divergence is developing and the hourly momentum indicator also has a positive crossover. This indicates that a bounce is possible. The bounce is likely to be temporary in nature and is unlikely to result in a trend reversal. The daily momentum indicator has a negative crossover, which is a sell signal. Overall, the downtrend is still intact and any bounce should be used as an opportunity to create fresh short positions. We expect the Nifty to target a level of 17,350 from a short-term perspective.
Rupak De, Senior Technical Analyst at LKP Securities
Nifty has fallen back into the falling channel, heightening the chances of further downsides. The 50DMA and 14DMA are in a bearish crossover. Also, the current value is sitting well below the critical near-term moving averages, with the momentum oscillator RSI (14) slipping below the reading of 50. The current set-up is likely to keep the Nifty under pressure, with a potential downside towards 17,150–17,200 over the short term. On the higher end, crucial resistance is placed at 17,800.
Rahul Ghose, Founder & CEO – Hedged
Traders should look to initiate long straddles on the monthly expiry in this environment with weekly offsets, as the VIX is far too low to create short straddles right now from a premium perspective.
Amol Athawale, Deputy Vice-President – Technical Research, Kotak Securities
With the market in an oversold territory, we could see a quick pullback rally if the index trades above 17,500. Above which, the pullback formation is likely to continue till 17,600-17,750. On the flip side, as long as the index is trading below 17,500, the weak sentiment will continue. Below which, the index could retest the level of the 200-day SMA or 17,400.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)