ITC slips below 20-day EMA; heres what F&O data suggests

ITC Limited opened with a downside gap on Friday. The opening level turned out to be the high point of the day, which resulted in the formation of a bearish opening Marubozu candle. This pattern occurs when the opening price is equal to the high of the day but continues moving lower all day; thus, forming a long bearish body. The bearish Marubozu candle indicates extreme bearishness.   

Further, on the weekly chart, the stock has formed a dark cloud cover candlestick pattern, which indicates a limited upside. Technically, the stock has slipped below its crucial short-term moving average, i.e. 20-day EMA level, which is a bearish sign. From the momentum indicators’ perspective, the RSI has given a bearish crossover on both the weekly as well as the daily timeframe, which supports the overall price structure.

Moreover, on the weekly chart, fading upside momentum is clearly visible as MACD histogram is declining since the last five candles.   

The F&O data is also suggesting a short build-up in the stock. On Friday, February series stock future has seen 1,74,20,800 addition of open interest, which is 14.56 per cent addition in the open interest. It indicates that there is a short build-up in the market. February month’s current open interest is 13,70,75,200.   

For February expiry, the total call open interest is 17,47,42,400 and the put open interest is 5,87,29,600. Hence, the open interest wise put-call ratio (PCR) is at 0.34 for February expiry.  

For February series, the highest call open interest is at 230 strikes with 2,87,45,600 OI. On the put side, the highest put open interest is at 200 strikes with 92,92,800 OI.  

Today, the highest addition in the open interest was seen at 220 calls of February expiry with 1,47,61,600 OI. The 230 calls have also seen a significant addition in the open interest. While on the put side, 210 puts have seen the highest addition in the open interest with 12,35,200 OI. The current derivative data suggest that Max Pain is at 220 while modified Max pain is at 224 for the monthly expiry.    

Going ahead, the zone of Rs 220-Rs 230 will act as crucial resistance for the stock. On the downside, the 50-day EMA will act as immediate support for the stock, which is currently placed at Rs 211.20 level.