Tech View: Defending 15,670 a must to avoid Nifty50 weakness

The index has been seeing a strong support near 15,670 since March and analysts see it as make-or-break level. A breach of it may bring downside towards 15,500-400, they warned.

Nifty50 has a double bottom support in the 15,670-157,00 zone and it would be extremely crucial to see if it defends it, said Milan Vaishnav, Founder and Technical Analyst, Gemstone Equity Research.

“In all likelihood, this level may get defended as the markets have a large number of short positions that have been added to the system. The downside risk for the markets would increase if the Nifty violates this support area meaningfully. Traders would be required to stay cautious and not blindly short the markets as short traps may occur,” Vaishnav said.

For the day, the index closed at 15,774.40, down 427.40 points or 2.64 per cent.

The index had on June 10 broken its short term support of 20-DMA on a closing basis.

“The index has now nosedived towards the swing lows seen in March and May this year. It is crucial to monitor how structure develops near this important zone. As long as the index stays above the March low of 15,671 on a daily closing basis, there is scope for some recovery. On the flip side, a failure to hold that low on a closing basis would push the index down to 15,400,” said Gaurav Ratnaparkhi of Sharekhan.

Nagaraj Shetti, Technical Research Analyst,

Securities said the short-term trend of Nifty50 continues to be negative.

“But having reached a crucial lower support of 15,700 and a formation of an unfilled weekly opening downside gap, there is a possibility of an upside bounce from the lows of around 15,500-15,400 levels in the next 1-2 sessions,” he said.

Not all analysts have recovery hopes.

The current leg of fall from the recent high of 16,793 took only six sessions against the recent pullback rally from the lows of 15,735 to a high of 16,793, which lasted for 14 sessions.

“This faster retracement on the downside may be hinting at a fresh leg of the downswing in progress,” said Mazhar Mohammad of Chartviewindia.in.


Nifty Bank

Chandan

of Securities said that Bank Nifty has formed a Bearish candle on the daily scale and has been forming lower lows for the last nine sessions.

Till it holds below 33,750, further weakness could be seen towards 33,000 and 32,500 zones, he said. The Motilal analyst sees Nifty50 hurdles at 34,000 and 34,250 levels.


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