Traders are advised to hold long positions with a stop below 11,090 levels, says Mazhar Mohammad.
The Nifty remained under pressure throughout the session and wiped out around 40 percent of the previous day's gains on October 10. The sell-off was led by banking stocks after IndusInd Bank Q2 earnings and commentary signalled concerns over asset quality.
The index closed below 11,250 levels but bounced back after testing the 200-day exponential moving average (DEMA), placed at 11,219, with an intraday low of 11,208.55, and formed a bearish candle on the daily charts.
After opening lower at 11,280.50, the Nifty extended losses and hit an intraday low of 11,208.55 in afternoon. The index closed 78.80 points lower at 11,234.50.
"It appears to be the day of consolidation on the bourses, after the 231 points rally witnessed in Wednesday's session as the Nifty50 registered a small bearish candle with a narrow range of 85 points before signing off the day," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
He said if the Nifty sustains above 11,208 levels (intraday low), it should stabilise and resume its upmove with an initial target of 11,321. A strong close above it, could can take the Nifty towards its critical resistance of 11,400.But, if the counter trades below 11,208 levels for at least 30 minutes, then intraday selling can resume with initial targets of 11,130, he said.
However, considering the strong move witnessed on October 9, traders were advised to hold long positions, with a stop below 11,090 levels, Mazhar Mohammad said.
According to Rohit Singre, Senior Technical Analyst at LKP Securities, the Nifty may see some consolidation in the range narrow range of 11,070-11,400.
The Nifty Bank fell sharply, though it managed to close above 28,000 levels. The index closed 2.68 percent lower at 28,013.45, wiping out 75 percent of previous day's gains and formed a bearish candle that resembled a bearish belt hold kind of pattern on the daily charts."The support for the Nifty Bank is coming near 27,800-27,550 levels, while resistance is coming near 28,300-28,500," Singre said.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.