The Nifty ended Wednesday 0.21 percent lower at 10,526.20. The positive opening failed to sustain above critical resistance levels placed around 10,570, followed by a sharp retracement in the last half of the session.
After hitting a high of 10,594, the Nifty ended the session much below 10,570 which suggests it may continue to face resistance around 10,570 levels in coming sessions as well.
Critical resistance placed at 10,570, which is its 50 percent Fibonacci retracement level of the entire downfall from Nifty’s all-time high to its recent low around 9,950 levels, has to be taken out on the upside for the next leg of upmove to unfold. But, that looks unlikely at this juncture. Hence staying cautious on every rise is advised. The downside supports are placed around 10,510 and 10,460.
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On the Nifty hourly chart, negative divergence in RSI followed by an upward trendline breakdown is seen, which may continue to build selling pressure around 10,570 levels. Hence, buying is not advised at this juncture. 50 EMA placed around 10,470 may play a critical role in coming sessions.
Nifty patterns on multiple timeframes show that it reacted down from Wednesdays high of 10,594 before ending the session with a bearish candle. This pattern suggests that the Nifty might get into a corrective down move within the broader uptrend.
On Wednesday, the Bank Nifty ended 0.92 percent down at 25,102.30. Ending the session with a big bearish Marubozu candle below the support of 25,150 suggests it may continue facing resistance around 25,250 and 25,400. Downside supports are placed around 25,000 and 24,800.
View on April 19 Bank Nifty weekly expiry:
Bank Nifty futures (CMP: 25,124.85) ended at a 22 points premium against the Bank Nifty spot (CMP: 25,102.30).
Huge long OI build up in 25,100CE followed by long OI build up in 25,200CE, 25,300CE, 25,400CE against minor long OI build up in 24,900PE and 24,800PE ahead of Thursdays weekly expiry suggests that the Bank Nifty futures may open on positive note around 25,100 and hold the support around 25,100.
BankNifty futures may see intraday buying on dips around 25,100 and continue to face tough resistance around 25,300 and 25,400. The intraday trend is expected to remain positive within the broader trading band of 25,100 to 25,400. This view is subject to change if and only if it starts moving decisively below 25,100.
Based on a thorough technical study, the house recommends Bank of Baroda which can deliver up to 6% return in the short-term:
Bank of Baroda | Rating: Sell | Target: Rs 136 | Stop loss: Rs 151 | Return: 6%
The stock on Wednesday ended with a bearish Marubozu candle below the critical support of Rs 146. Ending the session below the 30 EMA on a daily chart, with rising open interest, implies that the stock may once again come down to Rs 136 levels. We recommend Bank of Baroda as a sell on rise for a short-term downside target of Rs 136.
Disclaimer: The author is Technical Analyst at Stewart & Mackertich Wealth Management. The views and ideas expressed above may have been suggested to the clients of Stewart & Mackertich Wealth Management. It is advised that investors/traders should consult with their certified experts before taking any investment decision.