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Updated: Double Top at 22,800. Nifty Trade Setup for 02 May 2024
Nifty is looking week, ahead of US fed meeting as it forms a double top pattern around the 22,800 level, indicating further weakness in the market.
Updated:
Gift Nifty is trading 120 points higher than the Tuesday closing, indicating a bullish start for the Indian market, but it is currently facing resistance around the 22,800 level, which is a major resistance for Nifty.
So, I am assuming Nifty to trade sideways or in a range between 22,500 and 22,800, but you need to look, at how Nifty traded in the first 30-45 minutes, and if it stays above the 22,600 level then it may remain sideways throughout the day, but any downside will be pushed back from the support level of 22,500 level.
Today’s level: 22,500 – 22,700
Nifty opened higher on Tuesday around the 22,670 level and traded higher throughout the day making a new all-time high of 22,783.35, but in the last 1 hour of trading, we saw heavy selling in Nifty taking it down more than 1% from the day high around 22,560 level.
The selling was mainly in Index heavyweights including HDFC Bank (-0.61%), ICICI Bank (-0.84%), Infosys (-0.99%), and TCS (-1.28%), and not only these stocks – in fact, we saw weakness in almost all IT stocks along with Metal and Oil & Gas Sector that put some extra selling pressure in Nifty taking it down around 22,560 levels.
Looking at the stocks where TCS, Tech Mahindra, BPCL, Sun Pharma, HCL Tech, and DR Reddy’s Lab were the top losers, and on the other side M&M, Bajaj Finance, Power Grid, IndusInd Bank, Hero Motor Corp, and Shriram Finance were the top gainers in the Nifty 50.
Now look at the Technical Chart of Nifty 50, where it forms a Double Top Pattern around the 22,800 level.
Looking at the technical Chart of Nifty 50 we can see a double top pattern formation around the 22,800 level which indicates a further Bearish movement in Nifty.
There are various reasons that may is enough to indicate a coming bearishness in the market.
First, is the Double top formation in Nifty around the 22,800 level, which is enough in itself to indicate a bearish market.
Second, the US market is almost down by -1.00% around 11:00 PM, as Employment Cost Index data showed labor costs rose at the fastest pace in a year and a half in the first three months of 2024. (source)
Third, The US Federal Reserve began its two-day monetary policy meeting ending Wednesday with no hope of any rate cuts, ultimately putting pressure on the Equity Market.
Now, How to Trade in Nifty on Thursday, 2nd May, 2024
As seen on the technical chart, Nifty indicates a fall coming, so traders need to be cautious, after the double top formation along with a shooting star pattern on the daily time frame.
so, we are expecting the market to fall, and if it falls, then the first support for Nifty is around, the 22,500 level at the ascending trendline (shown in the image above), and if it falls further which is not so much expected as Thursday is the expiry day for Nifty, so I don’t expect so much downside.
But if it falls further then 22,400 acts as the reversal point for Nifty on the 2nd of May 2024.
So, Traders need to look for short trades but being cautious at support levels is a smart move.
Nifty May Futures: is not as weak as Nifty, but it indicates further downside, as it falls around 0.70% from its day high of 22,850 level.
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