Investors are advised to tread with caution and trade with a trailing stop loss placed below 10,600 levels. A close below this level could extend the selling pressure, suggest experts.
The Nifty50 which started on a bullish note failed to hold on to the momentum and closed below its opening level on Tuesday making a ‘Bearish Belt Hold’ kind of pattern on daily charts.
The index closed in green with gains of 2 points but it formed a bearish candlestick pattern which suggests momentum seems to be fading. For bulls to take complete control of D-Street, a close above 10,785 is required else we could consolidate in a narrow range.
The Nifty50 opened at 10,757.90 rose marginally to an intraday high of 10,758.55. It slipped towards its crucial 5-days exponential moving average (DEMA) where it took support at 10,691 before bouncing back above 10,700 to close at 10,717.80.
Investors are advised to tread with caution and trade with a trailing stop loss placed below 10,600 levels. A close below this level could extend the selling pressure, suggest experts.
“It appears to be a day of consolidation on the bourses as Nifty50 moved in a narrow range of around 70 points before signing off the day with a “Bearish Belt Hold kind” of candle formation on candlestick charts as it remained under pressure from the opening tick,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“However, as market is heading into a major event there is every possibility of slipping into a consolidation range between 10,785 – 10,600 levels. Technically strength shall not resume unless Nifty50 registers a close above 10785 levels,” he said.
Mohammad further added that only on such a breakout a bigger target towards 10,928 should be expected before the event where as on the downside still 10,600 remains to be a sacrosanct support and breach of which shall enhance selling pressure on markets in the short term.
India VIX moved up by 2.14 percent at 14.05. On the options front, maximum Put OI is placed at 10,500 followed by 10,600 strikes while maximum Call OI is placed at 11,000 followed by 10,800 strikes.
Fresh Put writing was seen at 10,500 and 10,700 strikes while minor Call unwinding was seen at immediate strike prices.
“Options data suggests that an immediate trading range between 10,650 to 10,850 levels stays intact in May series. Technically, Nifty index opened positive but follow up buying was missing at higher levels and it got stuck in a range of 40-50 points for the entire trading session,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“It has formed a contradicting pattern on the daily scale which suggests initialization of sideways momentum. Now, till it holds above 10,680, it can extend its up move towards 10,780 – 10,800 zones while a hold below 10,680 could drag it towards 10,638 and then towards 10,600 zones,” he said.
