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Tech View: Bloodbath on D-St! Should traders go short on Monday?

The US Federal Reserve’s nervousness kept the stock and currency markets on their toes. The S&P BSE Sensex fell more than 1,000 points while the Nifty50 broke below a crucial support at 17,400 and also briefly slipped below 50-DMA before bouncing back.

The short-term moving average for the Nifty50 is 17,315. The index rallied after taking support around 50-DMA, eventually closing 302 points lower at 17,327. It hit an intraday low of 17,291.

The Nifty50 formed a long bearish candle on the daily charts. The Supertrend indicator also triggered a sell on Friday.

A rise in US bond yields and selling by foreign institutional investors weighed on sentiment. FIIs were net sellers for more than Rs 2,500 crore in the cash segment of Indian equity markets on Thursday.

“A rise in US 10-year bond yields and a strong dollar index prompted FIIs to flee emerging markets. Vinod Nair, Research Director at

said.

time to shorten?
The Nifty has turned negative year-to-date (YTD) and as long as it trades below 17,700 the outlook is likely to remain negative in the near-term.

Traders may short the index for a possible target towards 17,100 in the coming week, including the expiry week, experts suggest.

“Markets are finally coming under pressure after showing resilience for quite some time and signs point to further decline. The Nifty Index has next crucial support at 17,100 zones,” Ajit Mishra, VP – Research,

broker said.

“As most sectors trade parallel to the benchmark, it is prudent to hold short positions as well. On the other hand, investors should use this phase to accumulate quality stocks in a staggered manner,” he added.

On the technical front, the Nifty has traded with lower highs and lower low formations for the past four trading sessions. A close below Friday’s support at 17,291 will add selling pressure in the coming week which is likely to be volatile.

“Options data suggests a broader trading range between 17,200 and 18,200 zones, while an immediate range is between 17,500 and 18,000 zones,” Chandan said

Vice President, Analyst-Derivatives at , said.

The Indian VIX was down 2.61% from 19.32 to 18.81. On the options front, the maximum call OI is 18,000 then 18,500 strikes, while the maximum put OI is 17,500 then 17,000 strikes.

“The Nifty formed a bearish candle on a daily chart and is trading below 21-DMA making prices bearish. Nifty has provided a breakdown of the horizontal line and a close below it, making prices bearish,” said Palak Kothari, Senior Technical Analyst at Choice Broking.

“Nifty support has shifted around the 17,150 level while 17,700 on the upside could act as an immediate barrier. On the other hand, Bank Nifty has support at 39,000 levels while resistance lies at 40,800 levels,” Kothari added.

“Overall the Nifty is looking weak on charts which may test the 17150 level in the coming week while a close above 17700 may indicate an up rally. Selling on the upside is prudent for the upcoming session,” she recommends.

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times)

https://economictimes.indiatimes.com/markets/stocks/news/tech-view-bloodbath-on-d-st-should-traders-go-short-on-monday/articleshow/94400560.cms Tech View: Bloodbath on D-St! Should traders go short on Monday?

Russell Falcon

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