Tech View: Charts hint tug-of-war between bulls & bears. How’s the trade setup for next week?

Following a gap-down opening in trade, the Nifty 50 index failed to hold and end above the psychologically-crucial 18000-level on Friday.

The 50-stock index ended 0.5% lower at 17944.20 points, after hovering between 17884.60 and 18034.25 points intraday.

The index has negated the formation of higher lows of the last three trading sessions and has formed a small bodied bearish candle on daily scale.

However, it has formed a small-bodied bullish candle on the weekly frame with bigger shadows on either side, which indicates a tug-of-war between bulls and bears near the 18000-mark, said Chandan Taparia, vice president – derivatives, Motilal Oswal Financial Services.

Now, it has to hold above 17888 level, for an up move towards 18081-18181 zones, whereas supports are placed at 17888 and 17777 zones, Taparia said.

Meanwhile, India VIX rose 1.5% to 13.0850 levels on Friday. On a week-on-week basis, it has risen about 3%, even as it hit a 15-month low of 10.1725 points on Thursday.

Trading in options of Nifty 50 shows open interest concentration in 18000 and 18500 call options, and 18000 and 17500 put options. This suggests a broader trading range of 17700 to 18300 for the 50-stock index, and an immediate trading range of 17800 to 18100 levels. What should traders do? Here’s what analysts said:

Nagaraj Shetti, technical analyst, HDFC Securities
A small negative candle was formed on the daily chart with long upper and lower shadow. Technically, this pattern indicates minor reversal in the market from the highs.

The short-term trend of Nifty is choppy with weak bias. The present weakness has not damaged the near-term uptrend status of the market so far, and we expect chances of buying emerging from near the lower support of around 17800 levels in the coming week. On the higher side, the area of 18150 could act as a resistance.

Jatin Gedia, technical analyst, Sharekhan by BNP Paribas
Despite the correction, on a weekly basis, the Nifty has managed to close in the green which is a bullish sign. The daily momentum indicator still has a positive crossover and thus, this dip should be bought into.

We shall continue to maintain our positive outlook on the Nifty for a target of 18300 from a short-term perspective.

Rohan Patil, technical analyst, SAMCO Securities
This week, Nifty attempted to close above its big Budget Day high, but profit booking stepped in towards the last day of the week and forced the index to close below its psychological 18000 mark.

Technically the structure is still bullish and Nifty stands at the strong polarity support, failing to hold which, the index is likely to see a further correction towards 17650-17500 zones. Only a sustained close above the 18200-18250 zone is likely to trigger bullish momentum toward 18450-18500 levels.

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