rewrite this title and make it good for SEOTech View: Nifty ends below 20 DEMA; 24,000 key to avoiding sell-off. How to trade on Wednesday

After opening on a negative note, the market continued to slide down for the better part of the session on Tuesday. Minor intraday upside recoveries have been used for sell- on-rise and Nifty finally closed at the lows.

A long bear candle was formed on Nifty’s daily chart on Tuesday, which has almost erased the gains made on Friday. Technically this market action is indicating a lack of strength to sustain the upside bounce.

The positive chart pattern like higher tops and bottoms is still intact as per the daily chart and the lower support of 24,200-24,000 is going to be crucial. If Nifty manages to hold above 24,200-24,000 levels in the next few sessions, there is a possibility of a sizable upside bounce in the market. Any failure to hold on to the said support could possibly bring intense selling pressure in the market. Immediate resistance is at 24,500 levels, said Nagaraj Shetti of HDFC Securities.

In the open interest (OI) data, the highest OI on the call side was observed at 24,500 and 24,400 strike prices, while on the put side, the highest OI was at 24,300 strike price followed by 24,350.

What should traders do? Here’s what analysts said:

Hrishikesh Yedve, Asit C. Mehta Investment Interrmediates

Technically, the index has formed a big red candle on the daily chart, and has broken the 100-DEMA support around the 24,360 levels, indicating weakness. However, Nifty is still consolidating in the band of 24,180 – 24,860, either side’s breakout will decide the index’s future move. In the immediate term, 24,180 will serve as significant support levels. If the index sustains below 24,180, weakness could extend towards 24,000-23,900 levels.

Rupak De, LKP Securities

Nifty slipped sharply following the formation of a Harami pattern on the daily timeframe. The index has fallen below the 21-EMA, indicating a rise in bearish bets in the market. Additionally, the indicator is in a bearish crossover, further supporting the negative sentiment. The short-term outlook remains weak, with the potential for a decline towards 24,200, where an initial round of support is expected. A meaningful recovery might be seen if Nifty does not break decisively below 24,200.

Praveen Dwarakanath, Hedged.in

Nifty closed below its 20 EMA with Tuesday’s fall of more than 1%. However, until the support for Nifty at 24,200 is intact, one can continue to buy on the dips with stop loss at the support at the 24,200 level. The immediate resistance for the index is at the 25,200 level. The RSI line has crossed below the RSI average line on the daily chart, indicating weakness in the index. The support at 24,200 is critical now, a break of which can take Nifty towards the 23800 level. Options writer’s data for the monthly expiry showed increased writing of the calls at the 24,500 and above levels, suggesting weakness in the index.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)