Technical View | Nifty rebounds, but sustainability above 19,500 key for further sharp upmove

The Nifty acted largely as anticipated, taking support at 19,300 and promptly bouncing back above 19,500 on August 4, accompanied by a decrease in volatility following a spike the previous two days. In the coming sessions, it will be crucial to monitor whether or not the index can sustain 19,500.

If the index maintains its position above the current level, it may encounter an initial barrier between 19,600 and 19,700, while 19,300 is expected to be a solid support level on the downside, according to experts.

The Nifty50 opened higher at 19,463 and remained within a 100-point range throughout the session before concluding the week at 19,515, up 135 points. On the daily charts, the index nearly recovered all of its previous day's losses and formed a bullish candlestick pattern with minor upper and lower wicks and a higher high, higher low formation.

On a weekly scale, however, a bearish candlestick pattern with upper and extended lower shadows has formed, resulting in lower highs and lower lows for the second consecutive week as the index declined 0.66 percent. Until it returns to higher highs and higher lows with less volatility, this is a cause for concern.

"From a technical standpoint, Friday's pattern indicates a market upswing. The Nifty has been forming a bearish pattern consisting of lower tops and bottoms over the course of the last 6-7 trading sessions, and the current uptrend may be consistent with the formation of a new lower top in the sequence. "However, the lower top reversal must be confirmed," said HDFC Securities's Nagaraj Shetti, a technical research analyst.

He believes the development of a high-wave pattern at the market's highs indicates the market is in a corrective phase with volatility.

"Therefore, the near-term trend of the Nifty remains negative. In the upcoming sessions, the current uptrend may encounter a formidable obstacle between 19,600 and 19,650. The immediate support level is 19,400," said Nagaraj.

On the Option front, the highest Call open interest was observed at the 19,600 strike, followed by the 20,000 strike, with significant Call writing at the 19,600 strike and then at the 19,900 strike, whereas the highest Put open interest was observed at the 19,400 strike, followed by the 19,500 strike, with a writing at the 19,500 strike and then at the 19,400 strike.

The above data indicated the Nifty may see immediate resistance at 19,600 levels, with support at the 19,400 mark.

Bank Nifty

Bank Nifty has also experienced a recovery, but experts say that until it decisively closes above the 45,800 barrier, it is likely to stay rangebound.

On the daily scale, the Bank Nifty fluctuated by about 600 points before closing 366 points higher at 44,880, forming a small bodied bullish candlestick pattern with minor upper and lower shadows; on the weekly scale, it declined by about 1.3 percent, forming yet another bearish candlestick pattern with lower highs and lower lows.

The 50-day simple moving average (SMA) or 44,500 would be the rock-solid support level for traders. Abol Athawale, vice president - technical research at Kotak Securities, predicted that the index would rise over that level and reach 45,400–45,500.

On the flip hand, he thinks the uptrend is at risk below 44,500 and could retest the 44,300-44,000 barrier below there.

Investment experts' opinions and advice on Moneypoise.com are their own and do not reflect the views or opinions of the website or its administration. Users of Moneypoise.com are cautioned to consult with qualified professionals before making any financial moves.

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