Nifty on Monday fell for the fourth straight session and, in the process, formed a bearish candle on the daily chart, with a long lower wick, indicating some buying emerging at lower levels. This was the third straight session when the index made lower high-lows. With this, the 50-pack index has fallen below its 21-day exponential moving average (EMA), hinting at weakening of sentiment.
"The decline continued in Nifty, as the headline index kept falling after forming a lower top on the daily chart. The sentiment has weakened further after Nifty dropped below the 21EMA. Additionally, the RSI has entered a bearish crossover," said Rupak De, Senior Technical Analyst at LKP Securities.
In the short term, De expects the trend to worsen and sees Nifty falling below 23,350, with a potential to fall further towards the 23,000 level. On the higher end, he sees Nifty resistance at 23,550.
Osho Krishnan, Senior Analyst at Angel One said the advance to decline ratio predominantly favored the bears and that the bullish gap on the daily chart also got filled as Nifty concluded below 20-day EMA after seven sessions, followed by a negative crossover in the RSI.
"From a technical standpoint, Nifty retracted to its consolidation phase, maintaining uncertainty among participants. The zone of 23,300-23,200 is likely to serve as crucial support, while a break below the same could push prices back toward the 23,000 psychological zone," Krishnan said.
This Angel One analyst said 23,500-23,700 is likely to be a critical hurdle, coinciding with the upper band of the ‘Falling Wedge’, and a decisive breakout could only trigger buying momentum in the comparable period.
Ajit Mishra of Religare Broking said the 23,200 has emerged as a crucial support level, and a decisive break below it could strengthen the bearish sentiment, potentially dragging the index toward its January low of 22,800.
In the case of Sensex, said Chandan Taparia of MOFSL, the index formed a bearish candle with a long lower shadow, indicating buying interest at lower levels even after selling pressure at higher zones. "Now it has to cross and hold above 77,500 to move higher towards 77,800 and 78,000 levels whereas supports are placed at 77,000 and 76,800 zones," he said.