On the daily chart, the Nifty index formed a strong bearish engulfing candle, reflecting significant selling pressure from higher levels following a gap-up opening. This pattern indicates the potential for continued bearish momentum, particularly if key support levels are breached. The index failed to sustain higher levels and closed near the 23,000 mark, signaling caution. A breakdown below this support could trigger extended selling pressure, potentially dragging the index toward the 22,800–22,500 range.
On the upside, immediate resistance is seen at 23,300, followed by a critical hurdle near 23,500. A sustained close above these resistance levels would be essential to negate the prevailing bearish sentiment and confirm a bullish reversal. Given the heightened market volatility, traders are advised to remain cautious and implement strict stop-loss measures to protect their capital, said Hardik Matalia of Choice Broking.
In the open interest (OI) data, the highest OI on the call side was observed at 23,200 and 23,100 strike prices, while on the put side, the highest OI was at 23,000 strike price followed by 22,800.
What should traders do? Here’s what analysts said:
Jatin Gedia, Mirae Asset SharekhanNifty opened gap-up however it could not sustain at higher levels and closed in the red down 320 points. On the daily charts, we can observe that the Nifty was consolidating in the range of 23,100 – 23,500 since the last six trading sessions which has been decisively broken on the downside. The breakdown indicates the resumption of the next leg of decline. On the downside we expect the nifty to drift towards 22670 which is the 38.2% Fibonacci retracement level of the rise from the March 2023 low of 16,828 to a high of 26,277 of September 2024. On the upside, 23,280 – 23,320 is the immediate hurdle zone from a short-term perspective.
Vatsal Bhuva, LKP Securities
On Tuesday, Nifty opened on a positive note but faced selling pressure near its 14-day EMA, closing with a long bearish candlestick just above the key support of 23,000 and below its consolidation range. The RSI, currently at 36 and in bearish crossover, indicates a bearish trend, suggesting room for further downside before entering the oversold zone and solidifying bearish dominance. Selling pressure continues to limit recoveries, and the follow-up move will be key to confirming further downside. A close below 23,000 could push the index toward pre-election levels of 22,500, with immediate resistance at 23,300. Until Nifty closes above 23,500, a sell-on-rise strategy is recommended.
Hrishikesh Yedve, Asit C. Mehta Investment Interrmediates
Technically, the Nifty formed a modest green candle on the daily chart, indicating strength. Immediate resistance for the index is placed around 23,400, while support is placed near 23,050. If the index sustains above 23,400, then a relief rally may extend to 23,550 levels. On the upside, the 250-Day Simple Moving Average (250-DSMA) hurdle is placed around 23,570 levels, which will act as a critical hurdle.
Nagaraj Shetti, HDFC Securities
A long bear candle was formed on the daily chart that has engulfed the narrow range movement of the last six sessions on the downside. The broader high-low range of 23400-23050 is now on the verge of downside breakout. The previous opening downside gap of 13th Jan has weighed high on the market and that resulted in a sharp weakness. The underlying trend has turned down sharply after a small upside bounce. The next lower support to be watched is around 22800 levels and any pullback rally could find strong resistance around 23200 levels.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)