The negative chart pattern like lower tops and bottoms is intact on the daily chart and the current upside bounce could possibly open another lower top formation in the short term.
On further upside, Nifty could encounter a strong hurdle at the recent down gap of January 13 around 23,350 levels. The near-term trend of Nifty remains weak and we expect this upside bounce could be a sell-on-rise opportunity around 23,350 levels. Immediate support is at 23,050 levels, said Nagaraj Shetti of HDFC Securities.
According to the open interest (OI) data, the highest OI on the call side was observed at 23,200 and 23,400 strike prices, while on the put side, the highest OI was at 23,200 strike price followed by 23,050.
What should traders do? Here’s what analysts said:
Jatin Gedia, Mirae Asset Sharekhan
Nifty is in a temporary relief rally after a sharp decline in the previous couple of trading sessions. During the fall the Nifty faced selling pressure from the 20-hour moving average, which is placed at 23,277. The downtrend is still intact and hence minor degree pullbacks towards the resistance zone (23,270 – 23,300) should be considered as a selling opportunity. On the downside, we expect the Nifty to drift lower towards 23,000 – 22,670 from a short -term perspective. A move above 23,340 shall lead to a further short covering otherwise the downtrend is intact.
Rupak De, LKP Securities
The Nifty remained choppy during the session, forming a bullish Harami Cross pattern on the daily chart. A bullish Harami pattern, especially after a significant correction, often signals a potential short-term recovery. The Nifty appears positive for the short term as long as it remains above 23,135. On the upside, it could move towards 23,400, and a decisive move above 23,400 may lead to higher levels.
Praveen Dwarakanath, Hedged.in
The Nifty, after a 6-day streak of breaking its previous day’s low, closed above without breaking its low, indicating a recovery in the fall. The index has formed an insider candle, indicating non-decisiveness. The momentum indicators are well below the oversold region, which can act as a reason for a bounce in the index from the current level. Options writer’s data for the January monthly expiry showed increased writing of the calls at the 23,200 and above levels and a short covering of puts at the 23,500 level, indicating mild bullishness.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
