Tech View: Nifty gives up key support level. What traders should do on Wednesday
Nifty on Tuesday ended 238 points lower to sneak below its 50-DEMA for the first time in the last four months and form a long bear candle on the daily chart.
The overall chart pattern of Nifty is weak and one may expect further decline in the near term. The next lower levels to be watched are around 21,500 in the next one week. Any rise up to 22,000 could be a sell-on-rise opportunity, Nagaraj Shetti of HDFC Securities said.
The daily and hourly momentum indicators have a negative crossover which is a sell signal. Nifty is making lower lows both on the daily and weekly charts, which is not a positive sign.
Analysis of the Open Interest (OI) data revealed the highest OI on the call side at the 22,000 strike price, followed by the 22,200 strike price. On the put side, the highest OI was observed at the 21,500 strike price.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan
The next crucial support level comes in at 21,740 and below that potentially towards 21,530. We believe that Nifty is at the fag end of the fall and hence the selling may not be that sharp.
Osho Krishan, Angel One
While on the higher front, the 22,000 zone is likely to be seen as an immediate hurdle, followed by the sturdy wall of 22,150-22,200. A sense of caution is warranted going ahead, focusing more on the stock-centric front. Also, one needs to follow the aforementioned levels thoroughly with proper risk management, refrain from bottom fishing, and wait for clear bullish reversal signals before considering aggressive
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