Technical View: Nifty with support at 19,600 may consolidate before getting into new trend

Expert feel Nifty may consolidate before getting into trend

The Nifty50 has seen volatility throughout the session and closed flat with a positive bias after taking support at 19,600 mark on September 25. It has formed Doji candlestick pattern on the daily charts, indicating indecisiveness among bulls and bears about future market trend.

Hence, the index may consolidate before getting into new trend and 19,600-19,500 area is expected to act as a support, while the 19,800 is likely to be resistance, experts said.

After opening flat at 19,678, the Nifty50 traded in the range of 19,734-19,601 levels during the session and finally settled at 19,674.50, up 0.20 points. It closed higher for the first time in last five consecutive sessions.

ALSO READ: Taking Stock: Market breaks 4-day losing streak; ends with mild gains

"The index remained volatile before closing with a Doji pattern on the daily timeframe. This suggests a possible pause in the prevailing bearish trend. From here, the market might consolidate a bit before starting a new trend," Rupak De, senior technical analyst at LKP Securities said.

He feels the support on the lower end is pegged at 19,600; a fall below 19,600 might initiate fresh shorts. On the higher end, the resistance is placed at 19,755, he said.

The Option data also indicated that 19,600-19,500 is expected to be near term support for the Nifty50, and 19,800 may be hurdle on the higher side.

On the Options front, the maximum Call open interest was seen at 19,800 strike, followed by 20,000 strike, with meaningful Call writing at 19,700 strike, then 20,000 strike, while the maximum Put open interest was at 19,000 strike, followed by 19,500, 19,700 & 19,600 strikes, with Put writing at 19,500 strike, then 19,400 strike.

Bank Nifty

The Bank Nifty has also snapped four-day losses to close 154 points higher at 44,766 after taking support at 44,400 levels. The index has formed bullish candlestick pattern with upper and lower shadows, which resembles High Wave kind of candlestick pattern (not exactly one) on the daily charts, indicating an indecisiveness among buyers and sellers about further trend.

Bank Nifty has witnessed a pullback from the 78.6 percent Fibonacci retracement level (44,400). "On the upside the pullback is likely towards 45,000 – 45,200. On the hourly charts the momentum indicator has a positive crossover which is a buy signal and the positive divergence suggests that the momentum on the downside is weakening," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.