On Tuesday, the Nifty 50 opened on a flat note and initially found support near the 24,000 mark. The index recovered from the opening weakness, moved above the previous session's high and touched an intraday high of 24,143.15. However, the recovery failed to sustain as selling pressure emerged at higher levels.
The index subsequently slipped below both the 24,000 mark and the previous session's low, forming a fresh intraday low of 23,952.55. A recovery during the Closing Auction Session (CAS) helped the Nifty erase most of its losses, with the index eventually settling at 24,055.80, down 24.60 points or 0.10%.
High Wave Candle Reflects Indecision
Tuesday's price action resulted in the formation of a small-bodied candle with long shadows on both sides, resembling a High Wave candle pattern.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
The formation of a lower low, along with a negative close, continues to indicate weakness in the near-term price structure. However, the index once again managed to defend the psychologically important 24,000 level on a closing basis.
For the second consecutive session, the Nifty moved below the previous day's low but recovered to close above 24,000. The index also ended near the 61.8% retracement level of the recent sharp upswing, making the current zone important from a technical perspective.
23,950 Emerges as Key Support
Going forward, the 23,950 level is likely to remain an important support. A decisive break below this level could increase selling pressure and expose the index to the July 27 gap zone placed between 23,892 and 23,824.
On the upside, the immediate resistance zone is placed between 24,209 and 24,244. This area coincides with the 50-DMA and the downward-sloping trendline drawn from the August 3 swing high. A sustained move above this resistance zone could open the way towards the 20-DMA, currently placed around 24,312.
Moving Averages Signal Loss of Momentum
The Nifty is currently trading below both its 20-DMA and 50-DMA. The 20-DMA continues to slope lower, while the 50-DMA has flattened, suggesting that the earlier upward momentum has weakened.
The immediate focus will therefore remain on whether the index can reclaim and sustain above the 50-DMA. Until then, the 23,950 level remains the key support to watch on the downside, while the 24,209-24,244 zone is likely to restrict upside attempts.
Stock to Watch: Vimta Labs
Vimta Labs is approaching a potential breakout from its channel pattern. The stock recently found support near the 50-DMA, which also coincided with the lower boundary of the channel and the rising trendline. From there, it staged a sharp recovery accompanied by strong volumes, indicating improved participation and strengthening buying interest.
The stock is currently trading above its key moving averages, including the 20-DMA, 50-DMA, 100-DMA and 200-DMA, which keeps the broader technical structure favourable. The 14-period RSI has also moved above its previous swing high and entered bullish territory, adding strength to the recent price move.
Going forward, a sustained move above the Rs 667-670 zone could confirm the breakout and open the way for Rs 700-720 in the short to medium term. On the downside, Rs 630 can be considered an important risk level on a closing basis.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
