Tech View: Nifty poised to end August expiry below 19,500. What traders should do
Nifty failed to reclaim the short-term moving average i.e. 20 EMA despite positive global cues to form a long negative candle on the daily chart as it ended 5 points higher.
Technically, this pattern indicates a bearish counterattack-type candle pattern after a small bounce.
The negative chart pattern like lower tops and bottoms is intact on the daily chart and Wednesday's high of 19,452 could now be considered as a new lower top of the sequence. Hence, one may expect further weakness in the short term, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
Amidst this downturn, the addition of substantial open interest in the 19500CE options signifies that the index is poised to expire below the 19,500 mark on Thursday’s expiry.
What should traders do? Here’s what analysts said:
Kunal Shah, LKP Securities
In terms of technical levels, the index's immediate support on the downside is evident in the range of 19,300-19,250.
A failure to sustain above this level could potentially trigger a continuation of the downward movement.
Jatin Gedia, Sharekhan
On the daily charts, we can observe that Nifty faced resistance at the zone of 19,430 – 19,450 which is the confluence of the 20-day moving average and also the 61.82% Fibonacci retracement level 19,449 of the fall from 19,584 – 19,229. The daily and the hourly momentum indicator has a positive crossover which is a sell signal.
Thus, both price and momentum indicators suggest that it has started the next leg of the fall.
Overall, we shall continue to maintain our negative outlook on the index for the target of 19,100. In terms of levels, 19,250 – 19,220 is the crucial support zone while 19,420 – 19,450 shall act as an immediate hurdle zone.
(Disclaimer: Recommendations,
