Tech View: Nifty forms doji candle; buy-on-dips suggested with 22,780 as key support. How to trade on Thursday

The Nifty index opened on a negative note on Wednesday, faced heavy selling pressure in the first half, but later witnessed recovery and finally settled on a flat to negative note at 23,045. The volatility index, India VIX, cooled off from 15.62 levels but still settled slightly higher by 0.16% at 14.90.

Technically speaking, Nifty has formed a double bottom pattern and a doji candle near crucial support levels on a daily scale. The 21-day simple moving average (DSMA) is placed at 23,285, making the 23,280-23,000 zone a strong hurdle. On the downside, 22,780 will act as a key support level. As long as the index holds 22,780, a buy-on-dips strategy is advisable, said Hrishikesh Yedve of Asit C. Mehta Investment Interrmediates.

As per the open interest (OI) data, the highest OI on the call side was observed at 23,300 and 23,400 strike prices, while on the put side, the highest OI was at 23,000 strike price followed by 22,800.

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

Nagaraj Shetti, HDFC SecuritiesA small negative body candle was formed on the daily chart with small upper and long lower shadows. Technically, this pattern indicates the formation of a ‘long long-legged doji’ doji-type candle pattern (not a classical one). This market action signals indecision at the lows. Normally, such formations like long-legged doji patterns after a reasonable decline indicate chances of bottom reversal post confirmation. The underlying trend of Nifty is still weak. But the interesting pattern formation at the support of 22,800 could hint at a possibility of a reversal pattern from current levels or from slight lows. A confirmation of the reversal pattern could possibly open a sizable upside bounce in the market. Immediate support is placed at 22,800 levels. A sustainable move above 23,150-23,200 levels could open more upside for the short term.

Rupak De, LKP Securities

Nifty closed with a long-legged Doji formation after a day of high volatility. On the lower end, the index found support just above the previous swing low. Until the previous low of 22,786 is broken decisively, the chances are high that Nifty might recover towards 23,500–23,600 in the near term. Immediate resistance is placed at 23,200, while immediate support is at 23,000.

Satish Chandra Aluri, Lemonn Markets Desk

Benchmark indices ended with marginal losses on Wednesday, extending their losing streak to 6th consecutive session. Broader mid and smallcaps also posted losses for another day. Selling pressure intensified in the morning as Nifty retested the lows around the 22,800 level before staging a comeback to close above the 23,000 level. Technically, the Nifty 50 is once again back at the critical support levels around 23,000 with 22,800 acting as immediate support on the downside again while on the upside, the 23,200-23,300 zone acts as the next resistance.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)