Technical View: Nifty forms bearish candle; may rally to 10,300 on positive FOMC outcome

The Nifty50 moved in a narrow range throughout the trading session on Wednesday ahead of the outcome of FOMC meeting later today and formed a bearish candle for the second trading session in a row.

The index is trading above its crucial short-term moving averages such as 5-day exponential moving average (DEMA), 10-DEMA, 13-DEMA, and 20-DEMA. A dovish commentary by US Fed later today could lead to a breakout on Nifty in Thursday’s session.

The index opened at 10,160 and rose to an intraday high of 10, 171. It slipped nearly 40 points to its intraday low of 10,134 before closing the trade at 10,141, down 6 points.

A breakout could take the index towards 10,200 and then further towards 10,300 while 10,080 will lend a strong support to the index. Investors are advised to hold their positions and add fresh longs only after a breakout.

“The market may witness a sudden spurt in either of the direction in next trading session as a reaction to Fed’s outcome,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“Any positive global cues may take the indices towards 10,320 kind of levels whereas a close below 10,100 should accelerate selling pressure which should ideally lead to downtrend thereby marking the end of an upward corrective rally in progress from the lows of 9685,” he said.

India VIX slightly moved up by 1.51 percent at 11.63 and the overall lower volatility with higher Put Call Ratio is supporting the bullish bias of the market.

On the options front, maximum Put OI was seen at strike prices 10,000 followed by 9,900 while maximum Call OI was seen at 10,200 followed by 10,300 strikes.

“We have not seen any significant fresh Put or Call writing even after the choppy market movement as traders are waiting for the FOMC outcome. However, intact Call writing at 10,200 is restricting its upside momentum,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“Nifty traded in a range of 48 points and has been consolidating in between 10,130 to 10,178 from last three trading sessions,” he said.

Taparia further added that the Nifty has to continue to hold above 10,138 to witness an up move towards 10,200 then 10,270 zones while on the downside supports are seen at 10,080 then 10,050 zones.