Tech View: Nifty indicators blink sell. What traders should do on Friday
Nifty ended Thursday’s weekly expiry 159 points lower to form a long bear candle with an unfulfilled opening down gap on the daily chart. Technical analysts say sharp reversals with more gap-up or gap-down moves indicate that the trend could continue longer.
The next important support to be watched is around 19,550 levels, which is a weekly 10-period EMA.
Minor upside bounce is to be expected from the supports, but the said bounce could be a sell-on-rise opportunity, said Nagaraj Shetti of HDFC Securities.
In terms of Open Interest (OI) data, the highest OI on the call side was observed at the 20,000 strike price, followed by the 19,900 strike price. On the put side, the highest OI was concentrated at the 19,800 strike price.
The daily momentum indicator provided a negative crossover, a sell signal, and is now in sync with the price action.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan by BNP Paribas
Nifty is in the process of retracing the rise it has witnessed 19,223 – 20,222.
It has now reached the zone of 19,720 – 19,680 where support in the form of the 20-day moving average and the 50% Fibonacci retracement level is placed. We expect Nifty to hold on to this support and provide a pullback.
Rupak De, Senior Technical analyst at LKP Securities
Nifty closed below the 20-EMA, signaling a diminishing bullish sentiment.
Weakness appears evident with a bearish crossover in the RSI. Selling on rallies remains the favored strategy as long as it stays below 20,000.
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