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

Indicating support-based buying at the 18,200 zones, the headline index Nifty today made a bearish candle with a long lower shadow on the daily chart. The red candle was seen on the weekly chart as well, but no major sign of trend reversal was noticed.

“Nifty has to hold above 18,250 zones for an up move towards 18,444, then 18600 zones, whereas supports are placed at 18,188 and 18,000 zones," said Chandan Taparia of Motilal Oswal. Analysts said the positive chart pattern, like higher tops and bottoms continued on the daily chart, and Nifty is currently in line with the formation of a new higher bottom formation.

MACD and RSI are attempting to converge, signalling a lack of momentum. India's VIX was down by 3.29% from 14.87 to 14.39 levels. Volatility is at comparatively lower levels which have been supporting the bulls.

Options data suggests a broader trading range between 18,000-18,700 zones, while an immediate trading range is between 18,200-18,500 zones.

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

Manish Shah, Trader and Coach
A low volatility phase in a trending market is usually a trend continuation trade. Nifty is not showing signs of deterioration as of now. We continue to assume that the underlying trend structure is up and bullishness is intact.

Nifty needs a strong green candle to signal trend continuation. As long as support at 18200 holds, the pattern of higher highs and higher lows will continue. For short-term traders, a break above 18,500 will signal the return of the bulls as Nifty moves higher to 18,900-19,000.

Ajit Mishra, VP - Research, Religare Broking
Markets have been indicating the prevailing consolidation to continue, and Nifty should decisively cross 18,450 levels to regain strength. Meanwhile, we reiterate our view to focus more on sector/stock selection, citing restricted participation. Besides, we’re observing breakout failures across sectors. So maintain strict risk management rules also in place.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas
Short-term momentum indicators have been showing negative divergence, a sign of weakness, and the price action is expected to follow suit. Going ahead, the Nifty is expected to tumble towards 18,100-18,000 in the short term. On the higher side, 18,450 has been acting 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 short term.

Rupak De, Senior Technical Analyst at LKP Securities
On the daily chart, the index slipped below the recent consolidation, suggesting a waning bullishness. The momentum oscillator is in a bearish crossover. On the lower end, support exists at 18,210/18,000. On the higher end, resistance is visible at 18,450.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Nifty continues to show consolidation movement with weak bias at the highs, and still there is no formation of any significant top reversal pattern. Further consolidation or minor weakness from here could find support around 18100 levels, and we expect an upside bounce from the lows.

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