The index slipped below its crucial support of 5-days exponential moving average placed at 11,420, which has been acting as crucial support for the index since 21 February.
The Nifty50 closed in negative territory for the third consecutive day in a row on Monday to close below its crucial support at 11400 levels. The index formed a bearish candle on the daily charts which also resembles a Hammer kind of pattern.
The index slipped below its crucial support of 5-days exponential moving average placed at 11,420, which has been acting as crucial support for the index since 21 February.
The Nifty50 took support near its 13-days EMA placed at 11,308 before bouncing towards 11,350 levels. The index closed 102 points lower at 11,354. The Nifty50 hit an intraday low of 11,311 and an intraday high of 11,395 in trade today.
For bulls to reclaim lost glory, the index has to close above Monday’s bearish gap zone present between 11,395-11,434 levels, suggest expert. And, if the index fails to hold on to 11311, the chances of the index slipping towards 11200 will increase, they say.
“Late recovery from the intraday lows of 11311 resulted in Hammer kind of formation as the bearish candle has a slightly little longer shadow. At this juncture, this formation itself shall not be construed as a recovery sign unless Nifty50 closes above Monday’s bearish gap zone present between 11395 – 11434 levels. Hence, a close above 11434 can be an initial sign of strength for bulls,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“On the other hand if Nifty fails to sustain above 11311 levels then it can continue its slide towards critical support present in the bullish gap zone of 11227 – 11187 levels registered on 12th March,” he said.
Mohammad further added that for the time being, traders should continue to avoid fresh long side exposure unless Nifty closes above 11434 levels.
On the Options front, maximum Put OI is placed at 11000 followed by 11200 strikes while maximum Call OI is placed at 11500 followed by 11600 strikes.
Meaningful Call writing is seen at 11400 followed by 11500 strikes while Put writing is seen at 11,300 followed by 11,100 strikes while. Option band signifies a lower trading range in between 11200 to 11450 zones.
India VIX moved up by 1.93 percent at 16.59 levels. Volatility fell down from highs but moved from its base of 14 zones so some volatile cues could be seen.
“The Nifty index opened negative and remained under pressure for the most part of the session as it drifted towards 11300 zones. It formed a Bearish Candle on the daily scale while mild recovery was witnessed in last hour of the session,” Chandan Taparia, Derivatives & Technical Analyst at Motilal Oswal told Moneycontrol.
“However, till it holds below 11550 zones weakness could be seen towards 11250 then 11200 zones while on the upside hurdle is seen at 11450 then 11500 zones,” he said.
