Tech View: Nifty forms red candle; 24,360 holds the key to further upside. How to Trade on Thursdays

The Nifty index formed a red candle on the daily chart on Wednesday and remained below the 100-day exponential moving average (100-DEMA), indicating weakness. However, currently, the index is placed near the lower end of the consolidation zone.

If the index holds Wednesday’s low of 24,150, a pullback to 24,350 is possible; However, for a significant upside, the index should hold above the 100-DEMA, which is placed near 24,360. As long as the index remains below 24,360, traders should take a cautious approach, said Asit C. Hrishikesh Yedve of Mehta Investment Intermediates said.

Open interest (OI) data shows significant call writing at 24,300 and 24,400 strikes, indicating resistance. Meanwhile, heavy put writing at 24,200 and 24,100 indicates strong support levels.

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

Jatin Gedia, Sher Khan

On the daily chart, we can see that the Nifty has been broadly consolidating in the range of 24,100 – 24,350 for the last three trading sessions. We expect this consolidation to continue as the hourly momentum indicator still has a negative crossover and is still far from the equilibrium line. On the downside, 24,160 – 24,140 is a strong support zone. On the upside, 24,350 – 24,400 is an immediate barrier.

Rupak De, LKP Securities

The Nifty saw selling pressure during the day, closing below 24,200. Sentiment looks weak and could worsen if Nifty sustains below 24,200. Decisive break below 24,200 may lead to correction towards 23,850 in short term. On the upside, 24,400 is likely to act as resistance.

Praveen Dwarkanath, Hedged.in

Nifty is trading below its 20 EMA, indicating weakness in the index. The index tested its crucial support at the 24,200 level and maintained the support. On Wednesday’s fall, however, support looks weak right now. As soon as the support at 24,200 is broken, the index will move towards its next support at 23,800 level. The RSI on the weekly chart shows a break in momentum, indicating weakness in the index to continue. Options Writer’s data for monthly expiry showed increased call writing at the 24,200 level and above, indicating weakness in the index.

Nagaraj Shetty, HDFC Securities

A reasonable negative candle with an upper shadow was formed on the daily chart, indicating a sharp reversal in the market after an upside bounce. The weakness of the last three sessions has changed the market sentiment to the downside and bullish chart patterns like higher tops and bottoms are on the verge of negative. This is not a good sign. The short-term trend of Nifty seems to have reversed. The next lower support is around 24,000-23,900 (opening upside gap of November 25th) in the short term. Immediate resistance is placed at 24,350-24,400 levels.

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