Moneycontrol
Jun 15, 2017 05:10 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms a bearish candle on charts; 9,520 make or break level

Traders are advised to tread cautiously as the Nifty still closed below its support of 9580.

Technical View: Nifty forms a bearish candle on charts; 9,520 make or break level

Kshitij Anand

Moneycontrol News

The Nifty came under selling pressure in opening trade on weak global cues and slipped below its crucial short-term moving averages such as 5-days exponential moving average (DEMA), 10-DEMA, and 13-DEMA.

The index took support at its crucial psychological support level of 9550 and bounced back towards 9,580 but it eventually closed below its opening level of 9,617 thus making a solid bearish candle on the daily candlestick charts on Thursday.

The Nifty50 opened at 9,617 and rose marginally to 9,621.40 which made a small upper shadow. It slipped to its intraday low of 9,560.80 before closing at 9,578, down 40 points from its previous close of 9,621.40.

Traders are advised to tread cautiously as the Nifty still closed below its support of 9580. Now a slip below 9,521- 9,550 could extend selling pressure but if bulls manage to close above 9,600-9,650 bulls might be able to make a comeback.

“The Nifty registered a solid bear candle and in this process, it appears to have breached psychologically important support level of 9600 levels. Thursday’s close has further strengthened the bear case for the near-term,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“However, critical support which can make or break the existing trend is placed at 9,520 levels and a close below which shall not only confirm a multi-week top at 9,700 levels but also open up a new down side target of around 250 points for this index which may take it back to 9250 kinds of levels,” he said.

If bulls manage to defend the levels of 9,520 on closing basis then we can once again expect a resumption of the upmove.

On the options front, maximum Put OI was seen at strike price 9500 followed by 9600 while maximum Call OI was seen at strike prices 9700 followed by 9600.

Fresh Call writing was seen at strike prices 9600, 9650, 9700, 9750, 9800 and 9900 strike while Put unwinding was seen in 9600 and lower strikes. Significant Call writing at the higher strike is restricting its upside momentum and giving a concern to bulls.

The Nifty index failed to hold 9,620 and corrected towards 9,560 levels. It has been making lower lows from last five consecutive sessions and resistances are slightly shifting lower.

“It formed a bearish candle which also looked like Bearish Belt Hold candle on the daily chart and given the close below immediate support of 9580 zone,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“If it sustains below 9,580 then selling pressure could be seen towards 9,550 and 9,530 while needs to cross and hold above 9,620 to witness a bounce back towards its multiple hurdles of 9,650 and 9,680 zone,” he said.
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