Technical Outlook: Nifty50 may reclaim 18,600 level on breaching 18,250 important resistance

The NSE Nifty50 is expected to reclaim 18,600 levels in sessions ahead after it breaches important resistance at the 18,250-18,270 range, analysts said citing the technical outlook for the headline index.

“Nifty is pausing near the critical resistance of 18250, where it has formed a spinning top candlestick formation, and if Nifty slips below the low of the candle, which is 18042, then we can expect a profit booking in the market,” Pravesh Gour, Senior Technical Analyst, Swastika Investmart said in a note.

Gour sees “17,800 as critical support, which is a cluster of multiple moving averages. If it manages to take out the 18,250 level, then we can expect a rally toward the 18440 and 18600 levels.”

Similarly, Arvinder Singh Nanda, Senior Vice President of Master Capital Services in his technical outlook said, “Prices are now poised to move towards 18000 and then 17950, the vicinity of rising neckline support of the inverse head and shoulder pattern.”

“If prices managed to fall below 17,940, the next support will align around 17,800. On the higher side, 18,270 will act as the nearest resistance which if broken decisively will open room for further upside towards 18,450,” the analyst at Master Capital Services said in his expectations.

While Ajit Mishra, VP - Technical Research, Religare Broking pointed out, “Markets are likely to spend some time around the current levels, after the sharp fall in the banking index. Meanwhile, rotational buying in other key sectors like auto, FMCG, energy and IT would continue to offer opportunities.”

“On the index front, 17,850 will continue to act as crucial support while the upside seems capped at 18,350 levels,” Mishra said, recommending to focus on stock selection and overnight risk management until Nifty resumes the trend.

Nifty Bank has support at 41,700

“Nifty Bank pulled back before hitting fresh highs, where it formed a dark cloud-covered formation, which is generally considered bearish. However, a 20-DMA of 42,300 is an immediate support level and a 100-DMA of 41700 is a critical support level where a bounce back can be seen,” Gour said.

According to Nanda, “Nifty Bank relatively looking more fragile compared to Nifty. Prices declined nearly 1.30 per cent to end the week at 42,661, and now looking to extend their ongoing southward journey for 41,800-41,500, which had acted as stiff resistance in the previous rally.”