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Technical view: Nifty stuck in a narrow range. What should traders do on Wednesday

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Trading broadly between 21,880 and 22,200 for the last three trading sessions, Nifty ended Tuesday down 92 points at the 22,000 mark.

Immediate support was seen at 21,850, a break of which would once again tilt the pattern in favor of the bears. One needs to adopt an open-minded approach in such a scenario. Support for the Nifty is now seen at the 22,000 and 21,800-850 levels. On the higher side, Nifty’s immediate resistance lies at 22,075 levels and the next resistance lies at 22,200 to 250 levels, said Tejas Shah, Technical Research, JM Financial & BlinkX.

Analysis of Open Interest (OI) data reveals the highest OI on the call side at the strike price of 22,100, followed by the strike price of 22,500. On the put side, the highest OI was observed at the strike price of 22,000.

What should traders do? Here’s what the analysts say:

Rajesh Bhosale, Angel One

Nifty has been oscillating within a range defined by the 20 and 50 day EMA since last week. A breakout of this range will likely dictate the next directional move. For now, in the absence of major traction, prices are expected to remain within this range. Therefore, it is advisable to take a cautious approach, focusing on buying on dips and exiting long positions on rallies as long as the range persists. Immediate support levels lie between 21,900 and 21,850, while 21,700 is a key support level. On the upside, resistance is expected around 22,200-22,250.

Tejas Shah, Technical Research, JM Financial and BlinkX

Over the past few days, Nifty has been stuck in the 21,800-22,200 zone. There have been many attempts by both bulls and bears to trigger a breakout, but both have failed so far. It appears that only a close above the 22,200-250 resistance zone will the bulls have full control of the pattern. Until then, it will be necessary to be very stock specific and look at long trades only in some of the best performing stocks/sectors.

Jatin Gedia, Sharekhan

On the daily charts, we can observe that Nifty is broadly trading in a range of 21,880 to 22,200 for the last three trading sessions. Action limited to a certain range will likely continue in the absence of near-term triggers. Additionally, as we approach the monthly expiration of the March series derivative contracts, volatility appears to have subsided, resulting in limited range movement. The contraction of the Bollinger time bands also suggests a sideways price movement. Thus, several parameters suggest that Nifty is likely to witness moderate price action in the coming trading sessions. Stock-specific actions will likely continue during this time.(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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