Technical View: Nifty forms bearish candle; MACD triggers a sell signal
After remaining flat for the most part of the day, Indian markets closed lower but off the day’s low on November 13.
The Sensex was down 229.02 points at 40,116.06, while the Nifty slipped 73 points to 11,840.50.
If the Nifty sustains below 11,850 zones then the short-term trend could turn negative to test the next major support of 11,780 then 11,700 zones. On the upside, hurdles are seen at 11,950 and then 12,000 zones, say experts.
The Nifty appeared to have resumed its weakness after a brief display of strength on November 11 with a small bullish candle, as it signed off the current session with a bearish formation, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.
“However, it appears to have bounced after testing its 13-day exponential moving average (11,834) from where it recovered in the recent correction with a low of 11,490 registered on October 25. Hence, the bulls can be expected to put up some fight around these levels, but other key technical parameters are shifting in favour of bears as daily MACD triggered a sell signal in today’s session,” he said.
Moreover, the Nifty also decisively breached its ascending trendline, which was in progress from the lows of 10,690 registered on September 20. Hence, the Nifty remains vulnerable to more downsides unless it closes above 11,950 levels, he said.
Traders with high risk appetite can continue to remain short on the Nifty, with a stop placed above 11,950 on closing basis, and look for initial targets close to 11,700 levels, he said.
India VIX moved up by 1.31% at 16.46 levels.
Maximum Put Open Interest (OI) was seen at 11,600 followed by 11,500 strike, while maximum Call OI was seen at 12,000 followed by 11,800 strike.
Call writing was seen at 12,000 followed by 11,900 strike, while marginal Put unwinding is seen at all the immediate strike.
Options data suggests a broader trading range in between 11,700 to 12,100 zones.
The Bank Nifty failed to surpass its previous day high of 31,200 and wiped out the gains of the last two trading sessions. It formed a bearish candle similar to bearish engulfing on the daily scale and also failed to hold above its key level of 30,800 mark. Now till it holds below 3,0800 zones, it can drift towards 30,250 then 30,000 zones, while on the upside hurdle is seen at 31,000 then 31,250 zones, said Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.