India VIX moved up by 1.66% at 13.92. On the options front, maximum Put open interest is placed at 10400 followed by 10000 strikes while maximum Call open interest is placed at 10700 followed by 11000 strikes.
The bulls failed to continue the winning run for the fourth consecutive day in a row as Nifty formed a bearish candle after three bullish candles. The index closed below its crucial 50-DMA and 50-DEMA placed at 10,623 and 10,559 levels respectively on Tuesday.
The index formed a bearish candle after three successive bullish candles which suggest that the momentum could hit a pause. However, analysts are still not advising traders to take active short positions.
A false breakout seen on Monday when Nifty closed above its 50-days exponential moving average (DEMA) could also hit sentiment. The index corrected after touching its 50-DMA placed around 10,623 levels.
The Nifty50 which opened at 10,615 failed to hold on to the momentum and slipped to its intraday low of 10,537. It closed 28 points lower at 10,554.
“Albeit Nifty50 was sold off as it opened into the resistance point of 10630 levels before signing off the day with a bearish candle, interestingly this price action has not resulted in any significant negative pattern formation,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Though the position of the bearish candle is appearing to be a dark cloud cover kind of formation technically it should have closed below the midpoint of Monday’s candle body to become more bearish. Besides, Nifty50 is still trading above Monday’s gap zone 10520 – 10499 levels and yet to decisively breach its 50-days exponential moving average on the downside,” he said.
Mohammad further added that Tuesday’s price action just shied away from creating technical breakdowns on lower time frame charts and hence market participants need to wait for one more negative trading session and some sort of technical breakdown before becoming bearish on markets.
However, a firm close above 10630 levels on the Nifty shall resume the upmove which started a couple of days back from the lows of 10340 levels.
India VIX moved up by 1.66% at 13.92. On the options front, maximum Put open interest is placed at 10400 followed by 10000 strikes while maximum Call open interest is placed at 10700 followed by 11000 strikes.
“Fresh call writing is seen at 10600 followed by 10700 which could restrict its upside momentum while Maximum Put Writing is seen at 10400 followed by 10600 strikes. Option band signifies a trading range between 10450-10700 zones,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“Nifty failed to surpass its immediate hurdle of 10620-10630 zones and corrected towards 10537 levels. It formed a Bearish candle similar to a Dark Cloud cover on the daily scale and respected to its 38.20% retracement of the entire down leg from 11171 to 10276 mark,” he said.
Taparia further added that Nifty has to surpass its immediate hurdle of 10620-10630 zones to extend its bounce back move towards 10720 else some profit booking could be seen towards the immediate support of 10500 then 10430 levels.
