Tech View: Nifty forms long red candle on daily chart. What traders should do on Friday

Nifty on Thursday fell over 200 points to form a strong bearish candle on the daily chart, which might negate the intermediate bullish undertone.

The short-term trend of Nifty seems to have turned down and one may expect some more weakness in the short term. The near-term uptrend of the market remains intact and further weakness down to the immediate support of 21,550-21,500 levels could be a buying opportunity, said Nagaraj Shetti of HDFC Securities.

What should traders do? Here’s what analysts said:

Rupak De, LKP Securities

Nifty experienced a sharp decline as follow-up selling emerged following profit-booking in the previous trading session. However, on the lower end, it found initial support at the 20-DMA. The trend could weaken if it drops below 21,690, at which point the index may decline towards 21,500. On the contrary, if it remains above 21,700, we might observe a recovery in the near term.

Osho Krishan, Angel One

The 20-DEMA is very much in the vicinity and a breach below could further disrupt the chart structure, and we might witness 21,500 in the comparable period. The broader structure remains sideways, with Nifty hovering within a broad range of 500-600 odd points. On a level-specific front, 21,500 should be acting as a strong support zone, and till the market sustains above the same, we might witness some buying traction. On the higher end, 21,800-21,900 is likely to act as an intermediate resistance zone, with a sturdy hurdle placed at the 22,000 mark.

Ashwin Ramani, derivatives analyst, SAMCO Securities

The long-short ratio fell sharply to 34.36% on 7th February from 37.31% on 6th February as foreign portfolio investors (FPIs) built significant short positions in index futures for the first time since the start of the February series.

Strong-call writing (bears entry) along with put writers exiting (bulls exit) was observed at the 21,800 & 21,900 Strike in Nifty, leading to a sharp intraday fall. The call writers built significant positions at the 21,700 Strike in the index. The put writers (bulls) have sizeable positions at the 21,500 Strike in Nifty & the Option activity at this Strike will provide cues about Nifty’s future direction.


Jatin Gedia – Technical Research Analyst at Sharekhan

Despite multiple attempts, the Nifty has been unable to surpass the resistance zone. On the downside, the 20-day moving average (21,694) has been providing support. The hourly momentum indicator has triggered a negative crossover, while the daily is still in buy mode, and thus providing divergent signals. This could lead to consolidation from a short-term perspective. Overall, we expect the consolidation to continue with negative bias. On the downside, the Nifty can drift towards the 21,500 – 21,435 zone where support parameters in the form of a 40-day average are placed.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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