The Nifty ended 63 points lower at 18,083 on November 2 after four straight days of gains as banks, auto, FMCG, and IT stocks came under pressure.
The index, however, managed to hold on to the psychologically vital 18,000 mark, which will act as a crucial level on either side, experts said.
The Nifty formed a bearish candle that resembled Bearish Belt Hold or Bearish Engulfing pattern on the daily charts.
A Bearish Belt Hold pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the day, making up the large body.
"On the daily chart, the index has formed a bearish outside bar along with an Engulfing bear candle. This makes today's high of 18,178 a key resistance for the Nifty50," Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas said.
The hourly chart also shows that weakness is creeping in again. Going ahead, 18,000 will be the make-or-break level, he said.
The short-term trajectory will remain positive as long as the Nifty sustains above 18,000. A breach of 18,000 on a closing basis will lead to consolidation, the market expert said.
Also read: Sensex falls 215 points, Nifty below 18,100 ahead of Fed outcome
The broader markets also corrected amid volatility but fared better than the benchmark. The Nifty midcap 100 index was down 0.08 percent and the smallcap 100 index fell 0.12 percent as breadth was muted.
The options data indicates an immediate trading range of 17,900-18,300 for the Nifty.
The maximum Call open interest was seen at 18,500 strike followed by 19,000 strike, while the maximum Put open interest was seen at 17,000 strike followed by 17,500 strike.
Also read: FIIs, MFs increase stake in Paytm for second straight quarter
Marginal Call writing was seen at 18,200 strike then 18,300 strike, while there was marginal Put writing at 18,100 strike followed by 18,000 strike.
India VIX was up by 3.30 percent to 16.66 levels, making the trend favourable for bears. But overall, volatility has remained on the lower side, which is vital for market stability, experts said.
Banking index
The Bank Nifty opened positive at 41,473 but failed to hold on and declined through the day. It closed 143 points lower at 41,147.
The banking index, which formed a bearish candle on the daily frame, has been moving in a 800-point range for the past seven sessions.
"It has to hold above 41,000 mark to march towards 41,500 and 41,650 levels, whereas supports are placed at 40,750 and 40,500 levels," Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services, said.
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