A small negative candle was formed on the daily chart at the new swing lows of 24,341 with minor upper and lower shadows. Technically, this pattern indicates the formation of a Doji-type candle pattern (not a classical one). Normally, the formation of Doji after a reasonable upmove or downmove is considered an impending reversal pattern on either side post-confirmation.

The short-term trend of the Nifty remains negative. But the present pattern formation is signaling a possibility of an upside bounce from here or from slightly lower levels. A sustainable move above 24,600-24,700 levels could confirm the quantum of upside bounce in the market. However, a slide below 24300 could trigger more weakness 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 24,450 and 24,500 strike prices, while on the put side, the highest OI was at 24,400 strike price followed by 24,350.

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

Jatin Gedia, SharekhanOn the daily charts we can observe that the Nifty has been falling since the last four trading sessions and as a result appears a bit oversold. This can lead to a pullback towards the 24550 – 24600 zone where the key hourly moving averages are placed. We expect the selling pressure to emerge again and hence any pullback towards the resistance zone should be considered as a selling opportunity. On the downside, 24200 24000 is likely from a short term perspective.

Praveen Dwarakanath, Hedged.in

Nifty was rangebound throughout the day, however, it broke the previous day’s low, indicating weakness in the index. The momentum indicators continue to show downside further, as the index closes just below its support at 24400 level. A dead cat bounce can be expected from the support, however, it can become an opportunity for Sell on the rise. Options writer’s data for the monthly expiry showed increased writing of puts and calls at 24400 levels but more calls being written, indicating a view of sideways to the downside in the index for tomorrow.

Tejas Shah, JM Financial & BlinkX

The candlestick pattern formed on the daily chart is not an encouraging one. Nifty has formed a DOJI candle on its daily chart which indicates indecisiveness prevailing in the marketplace at the current juncture. 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.

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