Tech View: Nifty forms ‘Long White Day’; target of 9,600 in sight
A 'Long White Day' signifies that the market witnessed sustained buying interest from the bulls for the most part of the trading day which is a bullish sign.
A day of record highs for Nifty. The bulls took control of the index from the word go to hit a record high of 9,517.20 and made a ‘Long White Day’ kind of pattern on the daily candlestick charts on Tuesday.
A 'Long White Day' signifies that the market witnessed sustained buying interest from the bulls for the most part of the trading day which is a bullish sign. If the momentum continues, the index is now on track to hit its next logical target of 9,550-9,600, suggests experts.
For the momentum to continue, the index has to hold above 9450 levels while a break below this level could take the index towards its support level of 9,380.
The Nifty50 opened at 9,461 to hit a record high of 9,517.20 which made a small upper shadow. It slipped marginally to 9,456.35 which made a small lower shadow, before closing the day at 9,512.25, up 66.85 points.
The index is trading well above its crucial short-term moving averages and any move towards 9,600 could be used to book partial profits, but the broader trend still remains to be on the upside.
“The Nifty50 appeared to have registered ‘Long White Day’ kind of formation as it witnessed a sustained buying throughout the trading session after witnessing a mild gap up opening,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Albeit, this strong move is suggesting a fresh breakout kind of situation we advise traders to use this rally to book profits especially in the zone of 9,550 – 9,600 levels by maintaining a stop below 9,449 levels on closing basis and sit on substantial cash as markets on multiple time frames are looking to have stretched on the upside,” he said.
Mohammad further added that this overbought nature may kick in correction at any point of time which may erase sizeable quantity of trader’s profits if short term reversal were to happen. “We also advise not to create fresh longs as risk-reward ratios for short term trading are not favourable enough,” he said.
On the options front, maximum Put OI was seen at strike price 9,300 followed by 9,400 while maximum Call OI was seen at strike price 9,500 followed by 9,600.
Fresh Put writing was seen at strike price 9,500 and 9,400 which signifies strong bulls grip in the market while Call unwinding was seen at strike prices 9,400 and 9,500 are giving the scope for the further upside.
“The Nifty index continued its upward journey and made a new record life high of 9517. It formed a strong Bullish candle on the daily chart and gave a remarkable close above psychological 9500 zone,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.com.“It has been making higher top – higher bottom formation and supports are gradually shifting higher. It has to hold above 9,450 zone to extend its up move towards 9,550 and 9,600 while on the downside immediate supports are seen at 9,420 and then towards 9,380,” he said.