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Technical View | Bulls retain dominance, sharp rally possible only above 18,114

The Nifty50 can be able to cross its previous swing high of 18,114 (April 2022) only if it sustains above 17,833 (Wednesday's low) in coming sessions and then the next resistance would be 18,350 and 18,604 levels, experts said.

August 18, 2022 / 08:25 PM IST
Buzzing Stocks, Slideshow

Buzzing Stocks, Slideshow

The Nifty50 managed to eke out moderate gains due to late recovery on August 18 as bulls retained their dominance by winning the game towards the end. The index continued uptrend for the eighth consecutive session despite weakness in Asian counterparts, supported by consistent buying interest showed by FIIs, stability of oil prices below $100 a barrel, and upside in banking & financial services stocks.

The index has formed a decent bullish candlestick pattern on the daily charts as the closing was higher than the opening levels. The Nifty50 can be able to cross its previous swing high of 18,114 (April 2022) only if it sustains above 17,833 (Wednesday's low) in coming sessions and then the next resistance would be 18,350 and 18,604 levels, experts said.

The broader markets also sustained their uptrend with the Nifty Midcap 100 and Smallcap 100 indices rising 0.19 percent each.

The Nifty50 opened lower at 17,899 and remained in a range for the major part of the session before gaining major traction in late trade to hit a day's high of 17,955. The index closed at 17,956.50, the highest closing level since April 4, up 12.20 points.

"Nifty50 remained volatile, with a range of 116 points, on the weekly expiry session before signing off the day with an indecisive formation. Weakness as of now is not panning out as clear-cut sell signals are missing on short-term charts despite being in extremely overbought zones," Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

Close

The index needs to sustain above 17,833 levels to retain a positive stance as the breach of said level can trigger more profit booking with initial targets present around 17,750 levels.

Contrary to this, if the Nifty manages to get past 17,965 levels (Thursday's high) then it can head towards 18,100.

If someone is long then they should maintain a stop-loss below 17,850 whereas intraday shorting opportunity shall arise below 17,830 levels for a modest target of 17,750, the market expert advised.

The MACD (moving average convergence and divergence) was trading with a positive bias on a daily time frame, indicating continuing strength in the Nifty50.

The stable volatility also favoured bulls as India VIX, the fear index, fell 1.85 percent to 17.35 levels. If the index stays below 18 levels, then the stability is expected to continue in the market, experts said.

On the options front, we have seen maximum Call open interest at 18,000 strike, which could be its crucial resistance for coming sessions, followed by 19,000 strike, with Call writing at 19,000 and 18,000 strikes. The maximum Put open interest was seen at 17,000 strike, which could be crucial support for the Nifty50 followed by 17,900 & 17,800 strikes, with Put writing at 17,000 strike then 17,900 & 17,800 strikes.

As per the above option data, the immediate trading range for the Nifty50 could be 17,800-18,200 levels.

Bank Nifty also started off the day on a weak note at 39,324 and hit a day's low of 39,291 amid volatility. However, the banking index gained strength in the last hour of trade and hit an intraday high of 39,704. The index rose 195 points to 39,656 and formed a decent bullish candle on the daily charts.

The index has maintained higher high higher low formation for the sixth consecutive session. "It has support at 39,000 levels while resistance is seen at the 40,000 mark," Palak Kothari, Senior Technical Analyst at Choice Broking said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sunil Shankar Matkar
first published: Aug 18, 2022 05:11 pm
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