Technical View | Nifty forms bearish candle, 21,000 is the level to watch

21,000 likely to be key support next week for Nifty

The Nifty ended lower on January 25, the monthly expiry day, following widespread selling, with IT and banking stocks coming under increaded pressure in a volatile session.

The index opened flat at 21,455 and traded lower throughout the day. It ended at 21,353, down 101 points, and index formed a small bearish candlestick pattern on the daily chart.

The chart pattern indicates a sell-on-rise opportunity, Nagaraj Shetti, senior technical research analyst at HDFC Securities said.

It closed the week a percent lower and formed a long bearish candlestick on the weekly scale. The next week would be busy one with the budget on February one along with Fed rate decision and auto sales numbers.

The level of 21,200 is expected to be the immediate support followed by 21,000. Resistance will be at 21,500 and then 21,700, experts said.

The short-term trend remains choppy with weak bias. "The market could encounter strong resistance around 21,500-21,600 levels in the coming sessions. Any weakness from here could find support around 21,100-21,000 levels in the near term," Shetti said.

On the monthly options front, the maximum Call open interest was seen at 21,300 strike, followed by 21,400 strike and 21,500 strike, with meaningful Call writing at similar strike in similar sequence. On the Put side, the 21,300 strike owned the maximum open interest, followed by 21,000 strike, and 21,200 strike, with writing at 21,300 strike.

The data indicates that 21,300 will be crucial for the index in the coming days, with immediate support at 21,200 and key support at 21,000, while the immediate resistance at 21,400-21,500 levels.

Bank Nifty

The banking index closed half a percent lower at 44,866. The bulls successfully defended the crucial support level of 44,500, establishing it as a critical line of defence, Kunal Shah, senior technical & derivative analyst at LKP Securities said.

If the index holds the support, it can move towards the resistance levels of 45,500 and 46,000 in the near term. A breach can see the index slip to around 44,000-43,500, he said.

For the week, the index fell 2.6 percent. It formed a long bearish candlestick after breaking 10 and 21-week exponential moving averages (EMAs).

The next support would be 50-week EMA (at around 44,200-44,000) below which the fall can worsen.

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