The index formed a bearish candle on the daily charts which also resembles a Bearish Harami kind of pattern.
Just when we thought that bulls have finally regained their hold on D-Street last week, bears made a comeback pushing Nifty5o below crucial support levels as well as 5 & 13 exponential moving averages (EMA) on Monday. The index formed a bearish candle on the daily charts which also resembles a Bearish Harami kind of pattern.
It seems like the index is stuck in a range of 100-150 points and now a breakout above 10,850-10895, or a breakdown below 10,700 could fuel selling pressure on D-Street. Investors are advised to stay cautious or at best remain neutral, suggest experts.
The Nifty also broke below two key short-term moving averages namely 5-days exponential moving average (EMA) placed at 10,775 and 13-EMA at 10,764.
The Nifty50 which opened flat rose marginally to hit an intraday high of 10,831. It failed to hold on to momentum and hit an intraday low of 10,753 before closing at 10,762, down 59 points.
Bank Nifty formed an Inside Bar pattern as it moved inside the range of the last session. The index has to now hold above 26,500 zones to witness an up move towards 26,750 and then towards 27,000 zones while a hold below 26,450 could see a dip towards 26,250 zones, suggest experts.
“Monday’s price action on Nifty with a Bearish Candle formation post Friday’s strong up move is clearly suggesting that this market is directionless and is in need of a breakout on either of the side for a directional move,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“On the downside, 10,700 still appears to be the critical support and a breach of which should ideally enhance selling pressure with bright prospects of Nifty heading towards 10,400 levels whereas on the upside 10,850 is still acting as a hurdle which needs to be conquered to unleash a fresh leg of up move in northern direction,” he said.
Mohammad further added that till such a breakout in either of the directions takes place this market shall continue to remain listless in the expiry week and it looks that traders will be better off by adopting a neutral stance.
India VIX moved up by 4.68 percent at 12.58 levels. On the options front, maximum Put OI is placed at 10,700 followed by 10,600 strikes while maximum Call OI is placed at 11,000 followed by 10,800 and 10,900 strikes.
“We have seen Put unwinding at all immediate strikes while significant Call writing is seen at 10,800 and 10,900 strikes. Option data suggests an immediate trading range in between 10,700 to 10,880 zones,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“The Nifty index got stuck in a broader range in between 10,700 to 10,835 zones from the last eight trading sessions. It formed a Bearish Harami followed by Bullish Harami pattern indicates that bulls and bears both are not ready to loosen their grip and follow up is missing on both the side,” he said.
Taparia further added that Nifty requires a decisive range breakout above 10,835 or below 10,700 zones to commence the next leg of the rally. “If manages to hold above 10,835 then only up move could be seen towards 10,888 and then towards 10,929 while a drift below 10,700 zones could take it towards 10,660 then 10,620 levels,” he said.
