India VIX was down by 1.59% from 11.32 to 11.14 levels. Volatility inched higher and caused some discomfort to the bulls but cooled off and later consolidated at its lower band.
Nifty Futures’ Open Interest (OI) indicated a buildup of fresh long positions ahead of the Thursday weekly expiry.
Strong put writer additions were observed at 19,500, which is where maximum open interest on the put side is placed. The level of 19,500 will act as a strong support and the option activity at this strike will provide importantcues about Nifty’s intraday direction, Samco Securities said.
The momentum setup on the daily and hourly time frame charts are providing divergent signals, which can lead to a consolidation in the short term, chartists said.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan
On the daily charts, we can observe that Nifty is in the process of retracing the entire fall it witnessed from 19,992 – 19,296. Currently, it is trading around the 19,600 – 19,650 zone where resistance parameters in the form of the 20-day moving average (19,657) are placed. On the upside crucial Fibonacci retracement levels are placed at 19,648 – 19,729 where we can expect the selling pressure to emerge.The current rally is a counter-trend pullback that is likely to fizzle out at Fibonacci retracement levels. The momentum setup on the daily and hourly time frame charts are providing divergent signals which can lead to a consolidation in the short term. Overall, the trend is still negative, and we expect the Nifty to target levels of 19,100 from a short-term perspective.
Kunal Shah, Senior Technical & Derivative analyst at LKP Securities
At present, the index is positioned in close proximity to a critical resistance zone at 19,640, which aligns with its 20-day moving average (20-DMA). A conclusive break above the 19,700 level, especially on a closing basis, would not only signify a reversal of the recent downtrend but also potentially open the path for further upward movement, with an eye toward the 20,000 mark.
Osho Krishan, Angel One
As far as levels are concerned, the bearish gap of 19,678-19,705 withholds the immediate hurdle and a decisive breach would attract new longs in the index for the next potential resistance around 19,800-19,850 in the comparable period. While on the downside, the pivotal support of 19,500 proved its mettle and is expected to cushion any blip in the shortcoming, followed by 19,440-19,380.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)