Moneycontrol
Last Updated : Jan 03, 2019 07:04 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms large bearish candle; go short on rallies

Weak global cues, as well as persistent selling in metals and auto names, dragged the Nifty below its 200-days moving average as well as 50-days exponential moving average (EMA) placed at 10,746.

Kshitij Anand @kshanand

A terrible Thursday! The Nifty registered another 100-point fall on Thursday and slipped below its crucial long-term as well as short-term moving averages. The index formed a strong bearish candle on the daily charts for the second consecutive day in a row.

Weak global cues, as well as persistent selling in metals and auto names, dragged the Nifty below its 200-days moving average as well as 50-days exponential moving average (EMA) placed at 10,746.

Investors are advised to stay on sidelines and wait for a breakout above 10930-10950 or a breakdown below 10,533 before initiating any fresh positions, suggest experts. In case we see a pullback because we are trading near support levels then go short with a stop below 10790.

The Nifty50 which opened at 10,796 managed to reclaim 10800 levels in the first half of the session but failed to hold on to the momentum and slipped to hit an intraday low below 10700 at 10,661. The index closed 120 points lower at 10,672.

“In line with our projections, Nifty50 continued its slide and registered a large bearish candle before signing off the penultimate day of the week. In this process, it decisively breached its 200-day moving average,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“For the last couple of weeks, the trajectory of the index looks to be range bound between 10,950 – 10500 kind of levels. Hence, unless Nifty50 breaches 10533 levels on a closing basis in the next two sessions bears will not be in a position to flex their muscle on the markets,” he said.

Mohammad further added that if the index manages a see pullback then a rally towards 10790 can be an ideal level to create fresh shorts and in any case, near-term outlook shall remain bearish unless Nifty trades above 10925 on a closing basis.

India VIX moved up by 2.44 percent at 16.79 levels. VIX has again spiked higher which is not giving comfort to bulls and finding selling pressure at a bounce back move.

Bank Nifty is forming lower highs from the last two trading sessions and the selling pressure is seen near to 27200-27350 zones.

On the options front, maximum Put OI is placed at 10500 followed by 10000 strikes while maximum Call OI is at 11000 followed by 11500 strikes.

Call writing is seen at 11000 followed by 10900 strikes while Put unwinding is seen at most of the immediate strike. Option band signifies a broader trading range in between 10500 to 10900 zones, say experts.

“The Nifty index remained under pressure and witnessed sustained selling throughout the session. It formed a Bearish candle on the daily scale and slipped towards 10650 zones,” Chandan Taparia, Associate Vice President, Analyst-Derivatives, Motilal Oswal Financial Services told Moneycontrol.

“It has been making lower highs – lower lows from last two sessions as it failed to surpass crucial hurdle of 10925-10985 zones. Now, till it holds below 10777 zones it can remain under pressure for the downside support towards 10600 then recent swing low of 10535 zones while on the upside hurdle is seen at 10777- 10820 zones,” he said.
First Published on Jan 3, 2019 04:44 pm
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