Tech View: Nifty creates red candles on daily and weekly charts. What traders should do next week

The Nifty headline index, showing support-based buying at the 18,200 zone, made a bearish candle with a long bearish shadow on the daily chart today. A red candle was also seen on the weekly chart, but no major sign of trend reversal was observed.

“Nifty needs to hold above 18,250 zone to move towards 18,444 and then 18,600 zone, while supports are placed at 18,188 and 18,000 zones,” Chandan said

of Analysts said that the positive chart pattern of higher tops and bottoms continued on the daily chart and the Nifty is currently aligning with a new higher bottom formation.

MACD and RSI are trying to converge, indicating a lack of momentum. India’s VIX index fell 3.29% to 14.39 from 14.87. Volatility is at relatively low levels supporting the bulls.

Options data suggests a wider trading range between the 18,000-18,700 zone, while the immediate trading range is between the 18,200-18,500 zone.

What should traders do? Here’s what the analysts said:

Manish Shah, Merchant and Coach
A low volatility phase in a trending market is usually a trend continuation trade. Nifty is showing no signs of deterioration at present. We continue to assume that the underlying trend structure is bullish and that the uptrend is intact.

Nifty needs a strong green candle to signal that the trend will continue. As long as the support at 18200 continues, the bearish pattern will continue higher and higher. For short-term traders, a break above 18,500 would signal a bullish comeback as Nifty moves up to 18,900-19,000.

Ajit Mishra, VP – Research, Broking
Markets are pointing to continued consolidation and Nifty needs to resolutely break 18,450 level to regain strength. At the same time, citing limited participation, we reiterate our view to focus more on sector/stock selection. In addition, we observe failures across sectors. Therefore, maintain strict risk management practices.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by
Short-term momentum indicators are showing negative divergence as a sign of weakness, and price action is expected to follow. Going forward, Nifty is expected to fall towards 18,100-18,000 in short term. On the higher side, 18,450 acts as a resistance for the index and will continue to act as a cap for the short term. The broader end of the market is expected to see a deeper cut in the near term.

Rupak De, Senior Technical Analyst
On the daily chart, the index has broken down from the recent consolidation, indicating that the upside is waning. The momentum oscillator is in a bearish crossover. On the downside, support is present at 18,210/18,000. On the upside, resistance is seen at 18,450.

Nagaraj Shetty, Technical Research Analyst, Securities
Nifty continues to show weak biased consolidation movement at higher levels and is yet to form any significant upside reversal pattern. From here, further consolidation or minor weakness may find support around the 18100 levels and we expect a bounce from the lows.

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not reflect the views of Economic Times)