Amidst positive global cues, the Nifty index struggled to regain its short-term moving average, the 20 EMA (Exponential Moving Average), indicating a strong bearish sentiment in the market. The daily chart displayed a long negative candle, ending just 5 points higher.
Bearish Counterattack Pattern Suggests Weakness
From a technical perspective, the observed pattern resembled a bearish counterattack-type candle formation following a minor bounce. The ongoing negative chart pattern, characterized by lower tops and bottoms, remains consistent on the daily chart. Moreover, the recent high of 19,452 (achieved on Wednesday) can be identified as a new lower top in the sequence. This reinforces the expectation of further short-term weakness.
Options Data Points to Sub-19,500 Expiry
Market activity suggests that substantial open interest has been added to the 19,500CE (Call Option Expiry) category. This implies that the index is likely to expire below the 19,500 level during Thursday’s expiry.
Key Support and Resistance Levels
In terms of technical levels, a key support zone resides within the range of 19,300 to 19,250. Should the index fail to sustain above this level, it could trigger a continuation of the downward trajectory.
Resistance and Momentum Indicators
The daily charts reveal that Nifty encountered resistance within the zone of 19,430 to 19,450. This zone corresponds to the convergence of the 20-day moving average and the 61.82% Fibonacci retracement level at 19,449, calculated from the decline between 19,584 and 19,229. The daily and hourly momentum indicators have displayed a negative crossover, signaling a sell-off. This alignment of price and momentum indicators suggests the initiation of the next phase of the downward movement.
Maintaining a Negative Outlook
Given these technical observations, our outlook on the index remains pessimistic, with a target set at 19,100. In terms of levels, the crucial support zone spans 19,250 to 19,220, while the immediate resistance range is anticipated between 19,420 and 19,450.
Disclaimer: The information provided here is for educational purposes only and should not be considered financial advice. Always conduct thorough research and consider consulting a financial professional before engaging in algorithmic trading.