Technical View: Nifty forms bearish candle, bounce back possible if index holds 11,460

July 10
17:29 2019

Nifty traded lower for a major part of the session and closed tad below 11,500 on July 10, as rising crude prices along with fall in financial services, metals, auto and PSU oil stocks dented sentiment.

The index closed below 11,500 for the first time since May 17 and formed bearish candle on daily charts.

Nifty after opening lower at 11,536.15 saw some recovery to hit a day’s high of 11,593.70, but slipped into the red after initial one hour of trade and remained lower for rest of session amid volatility. The index closed 57 points lower at 11,498.90.

Experts feel as the index has been moving in a particular range and still holding 11,460, there is still hope for recovery on short covering.

“Though Nifty registered a bearish candle it managed to defend the corrective swing low 11,461 registered on July 9 and appears to be in a consolidation mode as it moved in a narrow range of around 55 points in last three and half hours of today’s session. Hence one can remain hopeful of a pullback attempt as long as Nifty defends 11,460 on closing basis,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

According to him, if this level is breached going forward then corrective swing may initially get extended up to 11,420 by bridging the euphoric gap of 11,426–11,591 associated with election verdict.

Usually, these kinds of gaps act as support levels once they are filled, , adding

For time being traders should remain neutral on the index and wait for some signs of strength that can be established on a close above 11,600, Mazhar Mohammad said.

For Nifty options, maximum Put open interest (OI) was at 11,300 strike followed by 11,500 and 11,000 strikes while maximum Call OI was at 12,000 followed by 11,800 and 11,900 strikes. Meaningful Call writing was seen at 11,600, 11,500 and 11,700 strikes while Put writing was seen at 11,300 strike followed by 11,500 and 11,000 strikes.

“Nifty didn’t break previous day low that implies 11,420-11,450 can act as immediate support for the index whereas strong resistance is expected to be seen at 11,600, which is now seeing comfortable writing in the Call option,” Gaurav Bissa, AVP Derivatives & Technicals at LKP Securities said.

Nifty is forming bullish harmonic alt shark pattern on 15 minutes chart with PRZ at 11,445 spot that can provide an intraday bounce opportunity once it is triggered, he added.

India VIX fell marginally by 0.44 percent to 13.63 levels.

Bank Nifty failed to hold above 30,600 zone but remained consolidative in range of 300 points for most part of the session. The index closed 47.05 points lower at 30,522.10 and formed a bearish candle on daily scale as selling pressure was seen at higher levels.

“Now till it remains below 31,000 zone it could continue its weakness towards next major support of 30,250 zone while on the upside hurdle is seen at 30,850 then 31,000 zones,” Chandan Taparia of Motilal Oswal Financial Services said.

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