Tech View: Nifty faces resistance at 200-DSMA. A stay below 23,930 could indicate further downside. How to Trade Friday

Nifty formed a red candle on the daily chart on Thursday but stayed within the demand zone of 23,460-23,500, settling near the 200-day simple moving average (250-DSMA) support.

If the index maintains 23,460, a short-term decline towards 23,800-23,900 is possible. On the higher side, resistance will be found near 23,930, where the 200-DSMA is located. Hrishikesh Yedve of Asit C. Mehta Investment Intermediates said that if it remains below 23,460, weakness may occur towards 23,300-23,200 levels.

According to the open interest (OI) data, the highest OI on the call side was observed at strikes 23,550 and 23,600, while on the put side, the highest OI was observed at strikes 23,500, followed by 23,550.

What should traders do? Analysts said:

Jatin Gedia, Mirae Asset Sharekhan From the daily chart, we can see that Nifty is trading at the trend line support derived from joining the previous few swing lows. 23,550 – 23,500 zone acts as a make-or-break zone for Nifty. A breach below could lead to a drop to 23,263 (the November 2024 low) and below that to the psychological level of 23,000. On the other hand, the key hourly moving averages located at 23,631-23,702 will act as an immediate obstacle.

Vatsal Bhuva, LKP Securities

The Nifty closed slightly above the important support level of 23,500 on Thursday, forming a bearish candle below the 200-day EMA, signaling caution. A subsequent breach below 23,500 validates the sell-on-the-rise strategy and further declines are expected. Conversely, maintaining this support can lead to unity. In the short term, 23,500 acts as key support, while resistance lies at 23,800, limiting upside. Traders should monitor these levels closely as they determine the immediate directional trend of the index.

Hardik Matalia, Choice Broking

On the daily chart, the Nifty index has formed a strong bearish candle, indicating significant selling pressure at higher levels after a flat opening. This pattern suggests that bearish momentum is likely to continue, especially if key support levels are violated. The index failed to hold higher and closed near 23,500, signaling caution. A fall below this support could increase selling pressure, potentially pushing the index towards the 23,200-23,000 range. On the upside, immediate resistance was observed at 23,700, followed by an important resistance line around 23,850. A sustained close above these resistance levels is necessary to override the prevailing bearish sentiment and confirm a bullish reversal.

Praveen Dwarakanath, Hedged.in

Nifty retested the important support at 23,500 levels on Thursday, weakening it and is likely to break support in the coming days. The momentum indicator on the daily chart also shows a decrease in upward momentum, suggesting that the downtrend is continuing. The index forms an insider candle, indicating no clear signal until the support at 23,500 is removed. Data from monthly expiration options writers for January shows an increase in call selling above the 23,400 level and an increase in put selling above the 23,500 level, indicating support at the 23,500 level.

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