Nifty sees profit taking after an 8-day rally; 18,900 is a significant obstacle, according to analysts

 On Friday, the Nifty reached a low of 18,900 and had its first decline in nine sessions. On the daily chart, the 50-pack index reversed its rising high-low and produced a bearish candle. The index produced a bullish candle on the weekly scale, but it had a long wick, indicating selling at higher levels.Nifty had formed a bullish Outside Bar on the weekly chart in the previous week, according to Gaurav Ratnaparkhi of Sharekhan, and the index saw a follow-through on the upside this week.

"After eight straight sessions of gains, Nifty experienced profit taking on Friday. It is, nonetheless, continuing to hold above the immediate support. On the hourly chart, the index is trading close to both a rising trendline and important hourly moving averages. A crucial support level from which the index can resume its ascent is 18,600. The short-term picture is still favourable overall with a target of 19,000, "said Ratnaparkhi.

According to Apurva Sheth, Head of Market Perspectives at Samco Securities, the index's daily chart displays a higher top-upper-bottom structure, which denotes a persistent upward trend. He claimed that prices reached a new record high at the beginning of the week and thereafter kept climbing.

"The first indication of profit taking was displayed by Nifty on Friday during the session when prices dropped below the 18,900 level and a bearish candle appeared on the daily chart. At the level of 18,887.60, the index has completed the Bearish Crab harmonic pattern. On the daily chart, the momentum oscillator RSI (14) has reached overbought territory and is currently hooking lower below 70. As options sellers are active near 19,000 levels with increased open interest, the bulls must surpass 18,900 levels to gain bullish momentum "said Sheth.

The analyst believes that the index has support at 18,500 and that any move below that level will cause the decline to continue all the way down to 18,380.The sentiment is most likely to continue, according to Rupak De, Senior Technical Analyst at LKP Securities