stock market analysis: Tech View: Nifty struggling to hold 20-DMA. What traders should do on Friday

stock market analysis: Tech View: Nifty struggling to hold 20-DMA. What traders should do on Friday

NEW DELHI: Nifty on Thursday ended 89 points lower near the 19,550 mark to form a small negative candle with minor upper and lower shadows on the daily chart. Technically, this pattern indicates sideways movement in the market with weak bias at the crucial resistance of 19,650 levels. The repeated testing of the hurdle without showing any sharp weakness could eventually result in an upside breakout of the said resistance, said Nagaraj Shetti of HDFC Securities.

Though Nifty seems to have formed a new lower top at 19,645 levels on Wednesday, there is no indication of any sharp weakness from the lower highs.

Nifty has been struggling to hold a short-term moving average i.e. 20 EMA mainly due to the underperformance from the banking pack.

What should traders do? Here’s what analysts said:

Jatin Gedia, Sharekhan
On the daily charts, we can observe that Nifty faced resistance at the falling trend line, and the 20-day moving average is placed in the zone 19630 – 19670. Nifty was unable to witness follow-through buying and traded with the range 19645 – 19,467 of the previous trading session. Until the Nifty trades below the zone 19,630 – 19,670, we can expect the pressure to persist. The momentum set up on the daily and hourly time frame charts are providing divergent signals which can lead to a consolidation in the short term. Overall, the trend is still negative, and we expect the index to target levels of 19,100 from a short-term perspective.

Rahul Ghose, Founder & CEO – Hedged
Nifty has been trading in a very tight range for a few days between 19,450 and 19,650. A breakout above the 19,650 will not imply an uptrend, the level for that to happen is 19800. Similarly, a breakdown below 19,450 will not imply a downtrend, the level for that would be the 19000 level. Short straddle with wings for next week’s expiry is still a popular choice of instrument. For Bank Nifty, The RBI commentary led to selling even though it was status quo, 44,500 is a very crucial level to watch for. If we see two bearish closings below this level the trend further becomes bearish till 43,500. The Bank Nifty Index has been struggling to close past its resistance at 45,300 and will continue to sell off on every rally up to this level.Osho Krishan, Angel One
Technically, the index continues to hover near the 20-day SMA with no significant change in the chart structure, portraying a lack of conviction by both counterparties. Structurally the setup remains unchanged, suggesting further consolidation in the index and continuing the time-wise corrective phase. On the levels front, the bearish gap of 19,678-19,705 withholds the sturdy hurdle and on the lower end, 19,500-194,40-19,380 holds the pivotal support for Nifty in the comparable period.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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