Technical View | 21,000 seems to be crucial for upward journey in Nifty going forward

21,000 crucial for Nifty's either side of journey going ahead

The Nifty 50 faced strong resistance at the psychological 21,000 mark for yet another session but failed to close above the same, indicating the significance of this level for the upward journey going ahead. The index saw a fresh record closing high and formed a small-bodied bullish candlestick pattern with upper and lower shadows, which resembles the Spinning Top kind of pattern on the daily charts.

Spinning Top is often considered as a neutral pattern, indicating indecisiveness among buyers and sellers about the future market trend. It can be formed in an uptrend as well as in a downtrend.

Hence, if the index decisively holds above the 21,000 mark in the coming days, then 21,100-21,300 is the possibility, with support at 20,900-20,800 levels, but in case it consolidates around the psychological level, then some profit-taking can't be ruled out, experts said, though higher highs, higher lows formation continued for the second consecutive session.

The Nifty 50 opened flat at 20,965 and continued to stay above 20,900 throughout the session. The index hit a new high of 21,026 in the morning but remained below the 21,000 mark for the rest of the trade. It settled at a fresh closing high of 20,997, up 28 points.

"The Nifty traded mostly sideways as traders stayed on the sidelines at the beginning of a data-packed week. There's a strong resistance at 21,000, with Call writers actively building positions. A decisive breakthrough above 21,000 is necessary to resume the uptrend," Rupak De, senior technical analyst at LKP Securities said.

Until then, he feels it's anticipated that the market will consolidate within a broader range.

The weekly Options data also indicated that 21,000 is expected to be the key resistance area for the Nifty50, with immediate support at 20,900.

The maximum weekly Call open interest was seen at 21,000 strike followed by 21,500 and 22,000 strike with meaningful Call writing at 21,000 strike and then 21,500 strike, while on the Put front, 20,900 strike owned the maximum open interest followed by 21,000 strike and then at 20,000 strike with writing at 20,900 strike and then 21,000 strike.

Bank Nifty

The Bank Nifty provided a bit of support to the benchmark Nifty 50 as the index opened flat and hit a new intraday record high of 47,588 during the day. Finally, it ended at a record closing high of 47,314, up 52 points and formed small bodied bullish candlestick pattern with a long upper shadow which resembles the Shooting Star kind of candlestick pattern on the daily charts, indicating the possibility of a trend reversal.

A Shooting Star pattern is formed when the index comes under selling pressure as traders start booking profits at higher levels. The pattern is usually formed in an uptrend and is treated as a reversal pattern but requires confirmation.

"Now it has to continue to hold above 47,250 levels, to make an up move towards 47,588 then 47,750 levels while on the downside support is expected at 47,250 then 47,000 levels," Chandan Taparia, senior vice president | analyst-derivatives at Motilal Oswal Financial Services said.

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