Tech View: Nifty breaks 25,000 support, forming long bear candle. How to trade on Monday

The Nifty formed a bearish candle on the weekly chart as it ended Friday’s trading session on a negative note. The index tumbled 293 points ahead of the key US jobs report, which could influence the Federal Reserve’s decisions on the pace and magnitude of interest rate cuts.

A long bear candle was formed on the daily chart, indicating a sharp downside reversal for the market. The cluster support of 25,000 has been decisively broken on the downside. The chart confirms the short-term top reversal pattern at 25,333 level, said Nagaraj Shetty of HDFC Securities.

In open interest (OI) data, the highest OI on the call side was seen at 25,000 and 24,900 strike prices, while on the put side, the highest OI was seen at 24,600 strike price followed by 24,800.

What should traders do? Here’s what analysts had to say:

Jatin Gedia, Sher Khan

On the daily chart, we can observe that the Nifty has reached the critical support zone at 24,850 – 24,800 due to the decline, which is in line with the 20-day moving average and the 38.2% Fibonacci retracement level. We expect Nifty to hold this support zone and hence maintain our short-term positive outlook on Nifty. The immediate barrier is placed at 25,000.

Hrishikesh Yedve, Asit C Mehta Investment Intermediates

Technically, the index broke the 25,000-25,100 support zone on Friday, forming a bearish engulfing candle on the weekly scale. On the daily chart, the Nifty closed below its 21-day exponential moving average (DEMA), indicating further weakness. The next major support is near 24,480, where the 50-DEMA is located. In the short term, any bounce should be seen as an opportunity to book profits.

Tejas Shah, JM Financial and BlinkX

Technically, the Nifty has closed below the psychological level of 25,000, which has been acting as a minor support for the past few days. This is a negative development for now. Support for Nifty is now seen at 24,800-850 and 24,600/24,450. On the upside, the immediate psychological resistance for the Nifty is at the 25,000 mark and the next resistance zone is at the 25,150-200 level. Overall, it will be interesting to see if there is a follow-up sale this week.

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