Tech View: Nifty forms red candle, buy on dips advised above 23,270. How to trade on Friday
Nifty index opened on a positive note on Thursday, maintained buying interest in the first half, but later witnessed profit booking and finally settled on a flat-to-negative note at 23,031. The volatility index, India VIX, cooled off from 15.47 levels but still settled slightly higher by 0.40% at 14.96.
Technically speaking, Nifty has formed a small red candle on a daily scale with a long upper shadow, indicating selling pressure at higher levels. The 21-Day Simple Moving Average (DSMA) is placed at 23,270, making the 23,270-23,300 zone a strong hurdle. On the downside, 22,780 will act as a key support level. As long as the index holds 22,780, a buy-on-dips strategy is advisable, said Hrishikesh Yedve of Asit C. Mehta Investment Interrmediates.
As per the open interest (OI) data, the highest OI on the call side was observed at 23,200 and 24,100 strike prices, while on the put side, the highest OI was at 23,000 strike price followed by 22,800.
What should traders do? Here’s what analysts said:
Nagaraj Shetti, HDFC Securities
A small red candle was formed on the daily chart with a long upper shadow. Technically, this market action indicates a lack of strength in the upside bounce of the market. The short-term trend of Nifty remains positive, but the market is lacking the strength to surpass immediate hurdles. A decisive move above 23,250 levels could confirm near-term bottom reversal pattern in the market. Immediate support is placed at 22,800 levels.
Rupak De, LKP Securities
The Nifty remained volatile
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