Technical View: Nifty 50 broke its two-day winning streak on Friday. Nifty closed half percent down on January 24. The index climbed above the 10-day EMA (23,240). It reached near 23,350 area. But could not maintain both the levels on closing basis. It formed a bearish candlestick pattern with a long upper shadow on the daily timeframe. This is suggesting continued pressure at higher levels. From here, the 23,000 level is likely to act as important support. The index has been holding this level well during the current decline.
If it decisively breaks 23,000 on closing basis, it may slip to 22,800. However, if it remains above 23,000, the index may again move towards 23,350-23,400 zone amidst consolidation. This is what experts say.
Nifty opened with a decline at 23,184. It traded in a range of 300 points during the day. Then closed at 23,092 with a fall of 113 points. This week it fell by half a percent. Following a doji candle last week, it formed a bearish candlestick pattern with minor upper and lower shadows.
How could Nifty move on Monday 27th January?
According to Nagaraj Shetty of HDFC Securities, the bearish pattern of lower tops and bottoms continues on the daily chart. Friday’s high of 23,347 can now be considered a new lower top in the pattern.
Therefore, the near-term bias for Nifty remains weak. He said a fall below the immediate support of 22,975 could open the way for the next decline towards 22,800. He advised that any bounce towards 23,350-23,400 zone could be seen as a selling opportunity.
Monthly options data indicates that Nifty may trade in a broad range of 22,000-24,000 with immediate support at 23,000 and resistance at 23,300.
How can Bank Nifty move on Monday 27th January?
Bank Nifty also showed similar trading. It fell 221 points and closed at 48,368. The index formed a bearish candlestick pattern with a long upper shadow and a narrow lower wick on both the daily and weekly timeframes. This pattern is indicating pressure at a higher level. During the last week, it fell 0.36 percent.
Hrishikesh Yedve, Asit C Mehta Investment Intermediates, said, “On the daily scale, Bank Nifty has formed a red candle, which is a sign of weakness. However, the index defended the support at 48,000. If the index sustains the level of 48,000 , then a pullback rally towards 49,000-49,500 may be seen.”
On the other hand, sustaining below the 48,000 level could add to further weakness in the index, he said.
Meanwhile, the volatility index, India VIX, remained at high levels. After two days of decline, it rose 0.3 percent to 16.75. Due to this, bulls appeared cautious ahead of the Union Budget next week.
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