Technical View: Bears maintain strong hold as Nifty breaks 50-day EMA, 21,800 crucial to watch

The Nifty 50 made a good attempt of rebound, but selling pressure stepped in last couple of hours of trade and as a result, the index closed well below 50-day EMA (exponential moving average placed at 22,108) with bearish candlestick pattern on the daily charts on April 18, indicating an inherent weakness in the markets. The index fell for fourth straight day, but managed to defend the upward sloping support trendline adjoining lows of January 24 and March 20, 2024 during the day.

Hence, if the index manages to sustain above the trendline in the coming sessions, then 22,200 can act as a hurdle on the higher side, whereas breaking of the same trendline can bring the index down to 21,900-21,800 levels, experts said.

The Nifty 50 opened higher at 22,212 and climbed up to 22,327, but lost all gains in later part of afternoon and hit a day's low of 21,962. Finally, the index settled with 152 points losses at 21,996 and formed bearish candlestick pattern on the daily charts.

"The previous closure around 21,800 is likely to be seen as the pitstop for the bears, and if bulls could not barge on there, then we may test the 100 DEMA placed round 21,600 on an immediate basis," Osho Krishan, senior analyst - technical & derivative research at Angel One said.

On the flipside, he feels a series of resistance could be seen from 22,150-22,200, followed by the 20 DEMA at 22,300 zone. The undertone certainly favours the bears now and any rise should be seen as an opportunity to either exit longs or to look for bearish bets in the index, he advised.

On the weekly options front, the maximum Call open interest was seen at 22,000 strike, followed by 22,200 strike and 22,300 strike, with the meaningful Call writing at 22,000 strike, then 22,100 strike and 22,200 strike. On the Put side, the 22,000 strike owned the maximum open interest, followed by 22,200 strike and 21,900 strike, with writing at 22,000 strike, then 22,200 strike and 21,900 strike.

The above options data also indicated that 21,900 is expected to be an immediate support area for the Nifty 50, with the hurdle on the higher side at 22,200-22,100 levels.

Bank Nifty

The Bank Nifty has decisively broken down 50-day EMA (exponential moving average placed at 47,163) and continued downtrend for four days in a row. The banking index fell 415 points to 47,069 and formed long bearish candlestick pattern on the daily charts.

The 46,500 is expected to be crucial level to watch for the further selling pressure, which coincides with the long upward sloping support trendline as breaking of the same can bring major correction in the index, experts said.

"Bank Nifty also witnessed a sharp decline and tested the 61.82 percent Fibonacci retracement level (47,061) of the previous rise. Considering that prices have reached a crucial Fibonacci support we shall expect the correction to halt around the zone of 47,100 – 47,000 zone and provide a pullback during the next few trading sessions," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.

The rising volatility may also be a concern for bulls as it increased discomfort. India VIX, the fear gauge, jumped 3.36 percent to 13.04, from 12.62 levels, continuing uptrend for fourth consecutive day.

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