Technical View: Nifty forms bearish candle stepping into July series, crucial support seen at 11,691

The Nifty50 started off July series on a negative note and fell below 11,800 on June 28, amid caution ahead of the G-20 meet outcome and sub-par rainfall for four consecutive weeks.

The index failed to hold on to opening gains and traded lower for the majority of the session. It negated the formation of higher highs – higher lows after two trading sessions and formed a bearish candle on the daily scale while bullish candle on the weekly scale. For the week, it gained 0.55 percent.

If the index breaks its crucial support of 11,691, then it can fall below 11,600 in coming sessions, though, in the past, the index had managed many times to bounce back after moving near 11,600-11,650 levels, experts said.

The Nifty50 after opening higher at 11,861.15 hit an intraday high of 11,871.70, but immediately erased those gains and drifted lower as the day progressed to hit a day's low of 11,775.50. It closed 52.60 points lower at 11,788.90.

"Bulls disappointed on the first day of the new F&O series as they failed to capitalise on the recent breakout, on short term charts, which appears to have failed as the Nifty50 signed off the week with a bearish candle on the daily charts, whereas Spinning Top kind of formation was witnessed on the weekly charts with a small bullish candle body," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

He said if this weakness persists then the said index may head downwards to test its critical supports placed around 50-day exponential moving average (11,691), from where it bounced back on a couple of occasions in the recent past and hence, breach of the said average on closing basis can accentuate selling pressure further with initial targets placed at 11,625.

Meanwhile, upsides shall remain capped around 11,911 unless Nifty manages to get past the said hurdle, he added.

India VIX moved up by 2.13 percent to 14.95 levels.

On the option front, maximum Put open interest (OI) is at 11,500 followed by 11,000 strike while maximum Call OI is at 12,000 followed by 12,500 strike.

Put writing was seen at 11,500 followed by 11,300 strike while Call writing was seen at 12,000 followed by 12,300 strike.

Experts feel that Option data suggests a wider trading range in between 11,650 to 12,250 zones.

"Nifty index has to hold above 11,820 zone to witness an upmove towards 11,888 then 11,929 zones, while a hold below the same could drag it towards 11,720 then 11,650 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Bank Nifty failed to hold above 31,313 zones but consolidated in a narrow range of 200 points for the entire trading session.

The index closed 164.30 points lower at 31,105.20 and formed a bearish candle on the daily scale while forming a bullish candle on the weekly scale, which suggests follow up is missing at higher levels while dips are being bought into.