Technical View | 21,800 remains crucial for further upside towards psychological mark

21,800 crucial for Nifty to make an upmove towards 22,000

It was yet another consolidative and rangebound session for the Nifty 50 on January 1. The index hit a new high in the afternoon trading but failed to hold on to 21,800 due to profit-taking in late trade, while the data suggested that 21,650 has been held for yet another session.

Hence, if the said levels (21,650) get decisively broken, then 21,500 can be looked at as crucial support for the index, whereas on the higher side, the index needs to close and sustain above 21,800 for a further upward journey towards the psychological 22,000 mark, experts said, adding till then the consolidation may continue.

The Nifty 50 started off the first day of the New Year flat at 21,728 and remained volatile. It gained strength in the afternoon and touched a fresh record high of 21,834, but caught into profit booking in late trade and finally settled with just 11 points gains at 21,742.

The index has formed a small-bodied bullish candlestick pattern with a long upper shadow and a small lower shadow, which resembles the Spinning Top kind of pattern on the daily charts. Spinning Top is often considered a neutral pattern, indicating indecisiveness among buyers and sellers about the future market trend. It can be formed in an uptrend as well as in a downtrend. Also, it can act as a trend reversal pattern, for which the follow-up candle needs to give confirmation.

Also read: Gainers and Losers: 10 stocks that moved the most on January 1

"Despite this pattern, the overall trend remains positive. The index faces immediate resistance at the 22,000-22,200 zone," Omkar Patil, technical & derivatives analyst - institutional equity at Ashika Group said.

The strategy continues to favour buying on dips, maintaining a bullish stance as long as the immediate support on the downside at 21,500 is protected, he added.

According to Chandan Taparia, senior vice president | analyst-derivatives at Motilal Oswal Financial Services, the Nifty 50 has to hold above 21,650 levels, for an up move towards 22,000, then 22,222 zones, whereas supports are placed at 21,650 then 21,500 zone.

The 22,000 strike continued to own the maximum Call open interest, followed by the 22,500 strike and 22,400 strike with Call writing at 22,400 strike and then 21,900 strike, while on the Put front, the maximum open interest was seen at the 21,700 strike followed by the 21,000 strike and 21,600 and 21,500 strikes with writing at 21,700 strike and then at 21,800 and 21,600 strikes.

The above options data indicated that 21,900-22,000 is expected to be the key resistance area for the Nifty 50 going forward, with support at the 21,700-21,500 zone.

Bank Nifty

The Bank Nifty remained under pressure for yet another session. The index after volatility closed with 58 points loss at 48,234 and formed a Doji sort of candlestick pattern on the daily charts, indicating indecision among bulls and bears about further trend, while there have been lower highs and lower lows formation for the second consecutive session, but the index still held 48,000 mark.

"The sentiment might remain weak over the short term, however, immediate support is placed at 48,000, where Put writers are present heavily. A decisive fall below 48,000 might take the index towards 47,700/47,500," Rupak De, senior technical analyst at LKP Securities said.

On the higher end, he feels 48,300 is a significant level of resistance and bullish momentum might resume only above that level only.

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