Technical View: Nifty consolidates but sentiment remains positive, next hurdle at 22,400

The Nifty 50 remained highly volatile due to weekly expiry and gained strength in last hour to hit a new high on February 22, continuing higher highs for a seventh consecutive session. The index recouped all its previous day's losses after taking support at 21-day EMA (exponential moving average around 21,875) as well as upward sloping support trendline.

Hence, after the ongoing consolidation, the index is likely to march towards the next hurdle at 22,400-22,500 area on the higher side given the positive sentiment, while the key support will be at 21,875 level, experts said.

The Nifty 50 started off day higher at 22,082 but remained consolidative. The index gained strength in last hour of trade and high a new high of 22,252.50, before ending at a new closing high of 22,218, up 163 points.

The index has formed bullish candlestick pattern with long lower shadow on the daily charts, indicating buying interest at lower levels.

"The momentum indicator has experienced a bullish crossover. Overall sentiment has turned positive once again, with the potential to reach towards 22,400-22,600 in the short term. On the lower end, immediate support is placed at 22,100," Rupak De, senior technical analyst at LKP Securities said.

Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas, feels the hourly momentum indicator has triggered a fresh positive crossover and with the daily momentum indicator already having a positive crossover should provide speed to the upmove.

"Both price and momentum indicator is suggesting continuation of the positive price action. On the upside immediate hurdle is placed at 22,460 – 22,500 and on the downside Thursday’s low (21,875) shall act as a crucial support level from short term perspective," he said.

On the weekly options front, the maximum Call open interest was seen at 23,000 strike, followed by 22,000 strike & 22,800 strike, with Call writing at 23,000 strike, then 22,800 & 22,700 strikes. On the Put side, the 22,000 strike owned the maximum open interest, followed by 21,000 strike and 21,500 strike, with writing at 21,000 strike, then 22,000 & 21,900 strikes.

The above options data indicated that 22,000-21,900 can act as support levels, while the resistance is expected to be 22,500 level.

Bank Nifty

The Bank Nifty consolidated for yet another session with some more profit taking, falling 100 points to 46,920 and formed Doji candlestick pattern on the daily timeframe, indicating indecisiveness among bulls and bears about future market trend. The banking index took support at the downward sloping resistance trendline.

"Bank Nifty correction has halted at the support zone 46,400 – 46,500 where the hourly lower Bollinger band and the 40 hour exponential moving average was placed. We expect the Bank Nifty also the continue with the upmove till 48,000 – 48,300 from short term perspective," Jatin Gedia said.

Meanwhile, the volatility also cooled down further from 16 mark, giving comfort for bulls. The India VIX, the fear index, fell 4.58 percent to 15.20, from 15.93 level.

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