Tech View: Nifty forms an Inside Bar; near-term outlook negative

NEW DELHI: Nifty50 resumed its downward trend on Wednesday after a brief respite on Tuesday. It could barely hold above 11,150 level, as selling pressure emerged at higher levels. On the daily chart, the index formed an 'Inside Bar'. The short-term outlook remains negative.

Nifty’s immediate support stands at 11,100, a trade below which may extend the ongoing correction to 11,070-11,030 range where the 200-DMA lies, said Aditya Agarwala, Senior Manager, Technical Analyst at YES Securities.

“A trade above 11,230 with good volume can trigger a short-covering rally towards 11,300-11,375,” he said.

For the day, the index settled at 11,157, down 65.05 points, or 0.58 per cent. During the session, Nifty managed to defend its swing low of 11,108. The 14-day RSI is fast approaching the oversold territory i.e. at the 30 level.

“The index has formed an Inside bar on the daily chart. The breakout range is between 11,108 and 11,294. As per the wave structure, there is scope for the last leg of the pullback to play out on the upside. If the bulls manage to surpass the swing high of 11,294, Nifty can stretch towards 11,370-11,400,” said Gaurav Ratnaparkhi of Sharekhan.

The medium-term moving average is placed at 11,134, and the index may see a bigger fall on a close below this level, said Arun Kumar of Reliance Securities. The immediate support for the index lies at 11,036, Kumar said.

For now, the index can remain sideways with a negative bias, said Mazhar Mohammad, of Chartviewindia.in, who advised traders to initiate short position on any breach of the 11,100 mark and look for a modest target of 11,020 with a stop loss above the day’s high.