Tech View: Nifty’s drop below 24,350 could trigger a slide to 24K in near term. How to trade tomorrow

Tech View: Nifty’s drop below 24,350 could trigger a slide to 24K in near term. How to trade tomorrow

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A small positive candle was formed on the daily chart on Wednesday with an upper shadow. Technically, this formation indicates a type of bullish inverted hammer-type candle pattern, not a classical one. A sustainable move above the high of this pattern at 24,605 could confirm the positive pattern for the short term.

The underlying trend of Nifty remains weak. Having placed around the crucial support as per weekly charts, one may expect chances of an upside bounce from here or from the lows. A sustainable close only above 24,650-24,700 levels could confirm the upside bounce. However, a slide below 24,350 is likely to drag Nifty down to 24K mark in the near term, said Nagaraj Shetti of HDFC Securities.

In the open interest (OI) data, the highest OI on the call side was observed at 24,600 and 24,500 strike prices, while on the put side, the highest OI was at 24,400 strike price followed by 24,200.

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

Rupak De, LKP Securities

The Nifty formed an inverted hammer pattern on the daily chart, suggesting a possibility of recovery in the near term. Immediate support is placed at 24,350, where the 38.20% Fibonacci retracement level lies. Going forward, if Nifty holds above 24,350, it might recover towards 24,700-24,750. A further recovery above 24,750 could lead to a move towards 25,250. However, a significant correction may occur if Nifty falls below 24,350.

Hrishikesh Yedve, Asit C Mehta Investment Interrmediates

On the daily chart, Nifty formed an inverted hammer candle, which occurred after the breakdown of a head and shoulder pattern. This candlestick formation typically indicates strength. Thus, the 24,378 level serves as crucial short-term support. If Nifty holds above this, it might witness a pullback towards the 24,600–24,700 zone, which coincides with the neckline of the head and shoulder pattern. On the other hand, if Nifty breaks below 24,370, it could drift lower towards the 24,200–24,000 levels. Traders are advised to use any bounce to book profits, considering the overall weakness.

Tejas Shah, JM Financial & BlinkX

Technically, it is quite apparent that the market is facing selling pressure at higher levels. The Nifty has once again closed below the crucial support level of 24,750 for the second consecutive day, which is not a healthy sign.

Most technical indicators are in sell mode and are unlikely to reverse in a hurry. The bears are in full control of the markets at the current juncture and are using every pull-back rally to create short positions. Supports for Nifty are now seen at 24,400 and 24,200-250. On the higher side, immediate resistance for Nifty is at 24,550 level and the next crucial resistance zone is at 24,700-750 levels (Earlier, support zone now becomes resistance).

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

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