The contract will have to rise past 17,820 to regain bullish momentum

Equity benchmarks are trading sharply lower on Monday after witnessing a strong bounce on Friday. In the early trade, BSE Sensex, NSE Nifty had lost about 0.8 per cent each. Sensex was trading at 60,389, while Nifty 50 was at 17,710.

It is important to not that Nifty has come down below the key level of 17,800. As long as it stays below 17,800, the chances are high for it to fall to 17,600 and to 17,500. Important resistance is in the 17,800-17,850 range. Nifty has to breach the 17,850-levels to gain bullish momentum and see more rise.

Global indices

In Asia, barring the Nikkei 225 (27,721.44, up 0.77 per cent), all other major indices are in red. Hang Seng (21,160 or down 2.31 per cent) has been beaten down the most. Kospi (2,449) and Shanghai Composite (3,230) are down over one per cent.

In the US, the Dow Jones Industrial Average (33,926) fell 0.38 per cent on Friday. The index has to break the 34,500-levels to move higher towards 35,000.

Nifty 50 Futures

The Nifty 50 February (17,775) futures contract is down 0.72 per cent. The contract has come down below the key support level of 17,820. Immediate support is at 17,750. A break below this levels, can drag the contract down to 17,630-17,600 in the coming sessions.

The contract will have to rise past 17,820 to regain bullish momentum that can take the contract to 17,950-18,000.

Trading strategy

Go short on a break below 17,750. Keep the stop-loss at 17,790. Trail the stop-loss down to 17,725 as soon as the contract falls to 17,690. Move the stop-loss further down to 17,680 when the contract touches 17,660 on the downside. Exit the shorts at 17,640.

Supports: 17,750, 17,630

Resistances: 17,820, 17,950