Tech View: Sell-on-rally mode till 19,660 gets taken out decisively. What traders should do next week

economictimes.indiatimes.com:

Nifty on Friday bounced back in style with an upside of 135 points to form a small positive candle with minor upper and lower shadow on the daily chart. However, on the weekly chart, a red candle was seen with an upper and long lower wick. The hourly momentum indicator has also reached the equilibrium line indicating that the pullback has matured and can begin a new cycle on the downside, said Nagaraj Shetti of HDFC Securities.

Nifty Futures Open Interest (OI) indicated a build-up of fresh long positions. “50-DEMA for Nifty is placed at 19,175, which is likely to act as a support for Nifty going forward. Nifty has been moving in a lower high lower low formation since 27th July.

A strong close above 19,600 and the 20-DEMA is likely to ignite buying interest again,” Samco Securities said.What should traders do? Here’s what analysts said:Rahul Ghose, Founder & CEO – HedgedNifty is likely to be in a sell-on-rally mode until the 19,660 level gets taken out decisively. Although options data for calls and puts are evenly distributed, the ferocity of the fall has made the index biased turn towards the downside barring the level mentioned. For Bank Nifty, the level to watch out for is 45,550, until this gets taken out, all rallies will get sold into just like Nifty.

Once these levels get taken out, a short covering rally can start in the Indexes once again back to the 20,000 and the 46,500 levels.Amol Athawale, Kotak SecuritiesTechnically, we could see promising pullback rallies if Nifty trades above 19400, and on a further upsurge, it could move up to 19,600 or 20-day SMA. Further upside could lift the market to 19,700. On the flip side, below 19,400 the selling pressure is likely to accelerate.