Mazhar Mohammad said considering the volatile nature of current phase traders are advised to wait for signs of strength before going long whereas shorts can be considered on a close below 11,490 levels.
Nifty erased all its gains in the last hour of trade and closed lower on July 12 as traders turned cautious ahead of Infosys' Q1 earnings and economic data, which will be announced later in the day.
The index failed to hold on to 11,600 levels and formed bearish candle on daily as well as the weekly charts. For the week, the index lost 2.18 percent.
The strength in the market is possible only if the index closes decisively above 11,600 levels, but if it breaks 11,490 on closing basis then there could be more selling pressure, experts said.
Nifty after opening marginally higher at 11,601.15, slipped into the red in the initial hour itself, followed by a rangebound move. The index gained strength again in late morning deals but was caught in a bear trap again in late trade and closed 30.40 points lower at 11,552.50.
"Although sentiment is looking weak as Nifty has given up intraday gains, before signing off the session with a bearish candle on daily and weekly charts, the said index appears to be consolidating around its demand line of a multi-week ascending channel which is in progress from the highs of 10,941, registered in December 2018, with multiple touch points validating its strength," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said as long as the index sustains above and consolidates inside the said channel, whose support is placed around 11,530 for next session, bulls will still be having a fair chance of making a comeback. "In this regard, a close above 11,600 levels can be considered as an initial sign of strength in the index."
Mazhar Mohammad said contrary to this if bears manage to push the indices below 11,490 levels on closing basis then a fresh shorting opportunity should arise with eventual targets of 11,250 levels.
Considering the volatile nature of current phase traders, it is advisable to wait for signs of strength before going long whereas shorts can be considered on a close below 11,490 levels, he added.
On the option front, maximum Put OI is at 11,300 followed by 11,500 and 11,000 strikes while maximum Call OI is at 12,000 followed by 11,700 and 11,800 strikes.
Significant Put writing is at 11,400 then 11,500 strike while Call writing is at 11,700 followed by 11,600 strike. Option data suggests a trading range in between 11400 to 11800 zones.
India VIX fell by 4.49 percent to 11.91 levels. Lower VIX levels suggests consolidation likely to continue in near term, experts feel.
"Technically speaking Nifty has given double top breakdown below 11,620 zone, so trading below 11,620 can see more dips towards strong support of 11,450-11,400 zones. However, resistance for Nifty is coming near 11,620-11,700 zones," Rohit Singre, Senior Technical Analyst at LKP Securities told Moneycontrol.
Nifty Bank was also caught in a bear trap, dragging the market. The index closed 115.10 points lower at 30,601.45 and formed bearish candle on daily as well as weekly charts.Nifty Bank has immediate support near 31,400-31,200 zones while resistance is coming near 30,850-31,080 zones, Singre said.