Mazhar Mohammad advises traders to remain neutral on long side and make use of rallies to create short positions.
After opening sharply higher, the Nifty has a roller-coaster ride to close moderately higher on September 18, as traders waited for the outcome of the two-day Federal Reserve committee meeting later in the day. Metals, FMCG, select banking & financials, technology stocks and Reliance Industries led the market higher.
The index snapped two-day fall and maintained 10,800 levels, forming a bearish candle on intraday basis as the closing price was lower than the opening price. If we compare the September 18 closing with that of the previous day then it forms a bullish candle. The chart pattern is also known as the inside bar candle on the daily scale.
An inside bar is a two-candlestick price pattern and is formed when price trades within the high-low range of the previous session.
Experts feel the formation suggests a bearishness, but as supports are intact, the consolidation is likely to be seen in coming sessions.
After opening higher at 10,872.80, the Nifty traded within a range of 10,804.85-10,885.15. It closed 23.10 points higher at 10,840.70.
"The Nifty50 registered a bearish candle after moving in a narrow range of 80 points but managed to defend Tuesday's low of 10,796, which may be hinting at a brief consolidation going forward. In case the index sustains above 10,796 levels then a bounce towards 11,000 in the next couple of sessions can't be ruled out," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
He said the trend shall continue to favour bears and any such bounce should be utilised to create fresh short positions as long as the Nifty trades below 11,100 levels.
He advised traders to remain neutral on the long side and make use of rallies to create short positions. This projection would get negated if the Nifty closes above 11,141 levels, he said.
The broader markets also traded in line with benchmark. The Nifty midcap and smallcap indices gained 0.3 percent each.
The India VIX fell by 4.17 percent at 15.35 levels. Option data suggests the Nifty could trade in 10,650- 11,000 range.
Maximum put open interest is at 10,800, followed by 10,600 strike, while maximum call open interest is at 11,000, followed by 11,200 strike. Call writing was seen at 11,000, followed by 10,950 strike, while put writing was seen at 10,800, followed by 10,700 strike.
The Bank Nifty opened positive and managed to hold the previous day's low but bounce was not respected at higher zones. The index formed an inside bar on the daily scale and ended the session on flattish note, up 0.15 percent at 27,172.65."It needs to hold above 27,000 levels to witness a bounce towards 27,500 then 27,750 levels, while on the downside, supports are seen at 26,850 then 26,500 levels," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.The Great Diwali Discount!
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