The bullish pattern like higher tops and bottoms continued on the daily chart and the present weakness could be in line with the new higher bottom formation. But a decisive move below 21,860 levels (last higher bottom of 29th Feb) could negate this bullish setup and that could eventually form a bearish pattern like lower tops and bottoms, Nagaraj Shetti of HDFC Securities said.
The daily momentum indicator had a negative crossover. OI data showed that on the call side, the highest OI was observed at a 22,000 strike price, while on the put side, the highest OI was at 21,800 strike price.
What should traders do? Here’s what analysts said:
Rajesh Bhosale, Angel One
Any minor rebounds should be viewed as opportunities to lighten long positions and potentially initiate short ones. Near-term resistance is anticipated around the 22,200 – 22,250 range, while immediate support lies near the 50-EMA, situated between 21,850 – 21,800, followed by a swing low at 21,500. While sharp market declines often disregard key supports, the weekly expiry may influence these levels. Given the expected heightened volatility, traders are advised to avoid undue risk and utilize the mentioned support and resistance levels for trade setups.
Jatin Gedia, Sharekhan
We change the short-term outlook to sideways and the range of consolidation is likely to be 21,500 – 22,300. As per the Elliott wave principle, we believe that the index is forming wave D of an Ending Diagonal pattern. Below 21,530, the assumption of wave D shall be negated. In terms of levels, 21,910 – 21,860 is the crucial support zone, while 22,200 – 22,230 shall act as an immediate hurdle zone from a short-term perspective.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)