Moneycontrol
Get App
Last Updated : Nov 18, 2019 06:08 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms small bearish candle, but defends crucial 13-day EMA

Mazhar Mohammad advises aggressive traders with a high-risk appetite to remain short, with a stop above 11,950 on the closing basis.

Sunil Shankar Matkar

The Nifty, after an early trade uptick, largely remained rangebound with a negative bias for most of the session on November 18. HDFC Bank, Reliance Industries, TCS and Bajaj Finance pulled the market down.

The index made several attempts to hold 11,900 but failed, forming a small bearish candle on the daily charts following the Gravestone Doji formation in the previous session.

The bulls somehow managed to defend 13-day exponential moving average (11,852), which offered support to the index during corrections in this leg of upmove. Weakness can get accelerated once the bears decisively push the index below the said average, experts say.

Close

The Nifty opened higher at 11,915.15 and moved in a narrow range of 85 points. The index touched an intraday high of 11,946.20 in the early trade, but immediately wiped the gains to remain rangebound. It hit the day's low of 11,867.60 in the afternoon and closed 11 points lower at 11,884.50.

"If the index breaks 13 DEMA, then breach of recent corrective swing low of 11,802 levels looks inevitable and correction should further get extended towards 11,700 levels. Meanwhile, upsides shall remain capped around 11,973 and strength in the index shall not be expected unless the Nifty closes above this resistance point," Mazhar Mohammad, Chief Strategist,  Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.

He said as multiple technical parameters on the lower time- frame charts were favouring bears, with sell signals it would be prudent on the part the of traders to avoid long positions in the index. Aggressive traders with high-risk appetite were advised to remain short, with a stop above 11,950 on closing basis.

Options data suggests that the Nifty could trade in a broader range of 11,700 to 12,100 in the coming days.

Maximum Put open interest was seen at 11,600 followed by 11,500 strike, while maximum Call open interest was at 12,000 followed by 11,900 strike. Call writing was seen at 12,000 followed by 11,900 strike, while marginal Put writing was seen at 11,800 then 11,900 strike.

India VIX moved up by 4.82 percent to 15.75 levels.

The Bank Nifty opened flat but failed to surpass immediate hurdle of 31,200 levels and finally closed on a flattish note at 30,992.10. The index formed a Doji candle on the daily scale, while it has been forming higher highs - higher lows for the last five weeks.

"Price pattern suggests that major trend is positive but at the same time, pace of buying and momentum is missing. Now it has to continue to hold above 30,800 levels to witness an upmove towards 31,250 then 31,500 while on the downside major support is seen at 30,400 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.

Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.

First Published on Nov 18, 2019 05:06 pm
Sections
Follow us on