Tech View: Nifty breaks below 20-DMA. What traders should do on Thursday expiry

As the Nifty ended weaker by 207 points but above the support at 19,500 a long negative candle was formed on the daily chart with minor lower shadow. Chart readers said this pattern indicates a sharp negative reversal in the market as the index has ended below the 20-DMA of 19,622, which was holding on as support since the up move started in April 2023.

The daily momentum indicator has a negative crossover which is a sell signal, and the indicator is still away from the equilibrium line indicating that the weakness can continue.

Nifty is currently placed at the edge of moving below the immediate support of up trend line at 19,500 levels as per the concept of change in polarity. The next crucial lower supports to be watched around 19,200-19,100 levels in the coming week. Any pullback rally up to 19,600-19,650 could be a sell-on-rise opportunity, said Nagaraj Shetti of HDFC Securities.

Volume profile indicates Nifty may find support around the 18450 zone, however, 19300 would have remarkable levels if the index can sustain above this level.

What should traders do? Here’s what analysts said:
Osho Krishan, Angel One
19,500 proved its mettle, and until a decisive breakthrough is not seen, we may remain out of the concerned zone. On the downside, a series of supports could be seen starting from 19,500-19,400-19,300, while sacrosanct support is placed at the bullish gap of 19,230 odd zones. On the higher end, the bearish gap of 19,678-19,704 is likely to act as the immediate hurdle, followed by 19,800 in the comparable period.

Rupak De, LKP Securities
Nifty’s recent slip below its consolidation indicates a bearish sentiment. The index has also dropped below the 21EMA, reinforcing the bearish outlook. The RSI is signaling a bearish momentum for the future. On the downside, support is observed at 19,500, a decisive fall below 19,500 may create further negativity; while resistance is at 19600.

Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas
On the hourly charts, Nifty has witnessed a bounce back from the lower end of the falling channel. However, it is unlikely to result in a trend reversal. We expect the Nifty to continue with the weakness and on the downside, we expect it to target levels of 19,100 from a short-term perspective. Crucial support levels to keep handy are 19,420 – 19,400 and on the upside, 19,600 – 19,630 is the immediate hurdle zone.

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