Tech View: Sideways Nifty getting primed for sharp move. Here’s how to trade on Friday

The short-term trend of Nifty continues to be a range bound with positive bias. Previously, such sideways range movements at the higher tops have eventually resulted in a downward correction in the market from the highs. The Nifty continued to face stiff resistance around 23,400-23,500 levels and immediate support was at 23,280 levels, said Nagaraj Shetti of HDFC Securities.

Open Interest (OI) data showed that on the call side, the highest OI was observed at 23,500 and 23,700 strike prices. On the put side, the highest OI was at 22,800 strike price.

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

Jatin Gedia, Sharekhan

On the daily charts, we can observe that Nifty has been consolidating in the broad range of 23,200-23,500. A decisive close beyond the boundaries can lead to a trending move. The hourly momentum indicator still has a negative crossover, which is a sell signal and hence the rallies are fizzling out at higher levels.

The ideal strategy would be to take a contrarian bet at the extremes of the range and square off when prices are around the other extreme.Nifty consolidated in a range as it traded around the resistance of 23,500 and the lower time frame reading hinted at a time wise correction. However, the stock specific momentum was robust as the market breadth was positive and the midcap index outperformed to mark new record high. The broader trend for Nifty remains positive, but it just seems possible for a timewise correction (consolidation) to relieve the overbought set ups on the lower time frame charts. The immediate supports are placed around 23,200 and 23,000 and any dips towards the support should be seen as a buying opportunity. On the higher side, the call writers position at 23,500 strike makes it an immediate hurdle, which if surpassed then we could see a continuation of the trend towards 23,900-24,000 in the short term.

Rupak De, LKP Securities

Nifty has been range-bound flat for the last four days, indicating a pause before a sharp move. The direction of this move is not yet known, at least not before any directional breakout. From here, a decisive move above 23,500 might lead to the covering of call writing, which could take the index higher towards 23,800. On the lower end, support is placed at 23,300, below which the index might weaken.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)