Tech view: Nifty signals indecision, forms small candle. How to trade on Thursday

After showing a sharp weakness on Monday, Nifty consolidated on Tuesday with a range movement and closed the day lower by 13 points. After opening on a positive note, the Nifty attempted to move up soon after the opening. It later failed to sustain the opening gains and slipped into weakness with lacklustre movement. Minor upside recovery of the mid part was not successful.

A small candle was formed on the daily chart with an upper shadow. Technically, this pattern indicates a sell-on-rise opportunity in the market. But, the sharp follow-through selling momentum was absent on Tuesday, said Nagaraj Shetti of HDFC Securities.

In the open interest (OI) data, the highest OI on the call side was observed at 25,900 and 25,800 strike prices, while on the put side, the highest OI was at 25,800 strike price followed by 25,700.

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

Rupak De, LKP SecuritiesNifty formed a Doji pattern with a long upper shadow on the daily chart, indicating market indecision. Heavy call writing at 25,800 suggests it may act as strong resistance if sustained. Immediate support lies at 25,750, and a decisive break below this could push the index to 25,600/25,500. On the higher side, a move above 25,800 may propel Nifty towards 26,050, where sellers could become active again.

Mandar Bhojane, Choice Broking

On the daily chart, Nifty formed an inverted hammer candlestick pattern below the previous day’s candle, indicating that the bulls are losing strength. This suggests a continuation of the sideways to bearish trend, with a focus on stock-specific movements while the index corrects. If the index breaks below 25,730, a further correction toward 25,500 could be expected, which aligns with the 20-day EMA. On the upside, 26,000 is anticipated to act as immediate resistance.

Jatin Gedia, Sharekhan

On the daily charts we can observe that the selling pressure in Nifty is being absorbed around the 25,700 mark, which coincides with the 23.6% Fibonacci retracement mark. The fall on the hourly charts appears to be impulsive in nature suggesting that we are likely to get a pullback towards 25,950 – 26,000 and thereafter resume the next leg of the fall. Thus, traders should look for signs of weakness around resistance zone and initiate shorts. The correction can take the Nifty down towards 25,500 – 25,360, which coincides with the 20-day average and 38.2% Fibonacci retracement rally of the Aug Sept rally.

Tejas Shah, JM Financial & BlinkX

Technically, the Nifty closed below the psychological level of 26,000 for two consecutive days which has been acting as a minor support for the last couple of days. While this is a negative development it’s not something that opens a big downside. The index should now find support around the next major support zone of 25,650-700 and there is a strong possibility that the bulls will put in a fight here. Support for Nifty is now seen at 25,650-700 and 25,450-500. On the higher side, immediate psychological resistance is at 26,000 levels and the next resistance zone is at 26,125-150 levels. Overall, Nifty is likely to consolidate or remain volatile within the 25,700 – 26,000 range in the near term.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)