After forming a series of higher highs and higher lows over the last 2 months, Nifty seems to have formed minor degrees of lower highs and lower lows in the last 4-5 sessions amidst range movement. This pattern could be reflecting ongoing consolidation in the market.
The Nifty index formed an indecisive Doji candle after finishing the week with a small loss of 14 points, reflecting a downward trend in the short-term. HDFC Securities suggested any potential upside may encounter strong resistance at the 19,750-19,800 range, the next crucial lower supports level is expected around 19,500-19,450.
The Nifty index formed a shooting star-like pattern on Wednesday, facing resistance levels around 19,800 after gaining 98 points. Analysts suggest that the support zone will be in the range of 19,615-19,560, while the upside target is seen at 19,830-19,850. According to Prashanth Tapse, the technical landscape of the Nifty suggests consolidation, with interweek support at 19561 and immediate hurdles at 20000. Meanwhile, Minor downward correction has been completed and the market is likely to shift into an upside bounce, according to Nagaraj Shetti.
The said 20-day EMA has been holding for the past three months and has offered support for Nifty to witness upside bounces from it in the past, said Nagaraj Shetti of HDFC Securities. Open Interest (OI) data indicates a build-up of fresh short positions. FIIs were seen liquidating long positions in index futures as indicated by the Long-Short Ratio
Now, it has to hold above 19700 zones to extend the move towards 19900 then 20000 zones, while on the downside, support is placed at 19650 and 19550 zones, said Chandan Taparia of Motilal Oswal.