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Nov 14, 2017 05:30 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms a bearish candle; strong support placed near 10K

The Nifty50 which opened at 10,223 rose marginally to hit its intraday high of 10,248. But, then bears took control of D-Street and pushed the index below 10,200 to hit its intraday low of 10,175. The index closed 38 points lower at 10,186.

Kshitij Anand @kshanand

The Nifty50 which opened on a muted note failed to build momentum on the upside as bears took control of D-Street pushing the index below 10200. The Nifty50 made a bearish candle on the daily candlestick charts. It closed below its 20-DEMA for the second day in a row.

The Nifty index continued its weakness and tested next major support of 10,178 in trade today. It has been making lower highs and lower lows from the last six trading sessions which is a bearish sign.

For the index to move higher, it has to stay above 10,240 levels. The bullish momentum will only continue once it surpasses 10,335 levels, else the weakness will continue. On the downside, there is significant support available near 10,000 levels.

The Nifty50 which opened at 10,223 rose marginally to hit its intraday high of 10,248. But, then bears took control of D-Street and pushed the index below 10,200 to hit its intraday low of 10,175. The index closed 38 points lower at 10,186.

“Albeit markets moved in a narrow range of 73 points we suspect that the trade set up is switching to sell on rallies mode as intraday day rallies are being used to exit the positions or create fresh shorts,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“Besides, technical parameters on weekly time frame charts are also deteriorating fast creating the fear that a multi-week top can be in place at 10490 levels unless bulls make a strong attempt to recover and get past 10335 levels by the end of this week,” he added.

Mohammad further added that on the downsides significant support is available only at 9960 levels whereas minor support can be expected around 10120 or at 10088. Unless 10335 levels on the upside are taken off on closing basis fresh leg of uptrend can’t be expected.

India VIX moved up by 0.89 percent at 14.16. The rise in VIX is restricting its upside movement.

On the options front, maximum Put OI was seen at 10000 followed by 10200 strikes while maximum Call OI is at 10500 followed by 10400 strikes. Fresh Call writing at 10400, 10300 and 10200 strikes while marginal Put writing is seen at 10200 strikes.

“The Nifty index has been making lower highs – lower lows from last six trading sessions and requires to negate the same to get the short-term market stability,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“Now, if the index sustains below 10250 then weakness could continue towards 10120 then 10080 zones while on the upside hurdles are seen at 10250 then 10280 zones,” he said.

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