Bulls managed to regain control of D-Street after falling for five consecutive sessions in a row on Thursday to close around its crucial 20-days exponential moving average. It made a small bullish candle kind of a formation on the daily candlestick charts which signifies strength.
The index briefly moved in a range for the most part of the trading day but with a positive bias. A 'Small Bullish' candle is formed when the index trades higher throughout the sessions but in a defined range. The length of the candle signifies the range for the day.
The longer the candle, the more intense is the buying or selling activity. However, if the candle is short, just as the one, we observed on the charts on Thursday, it can be concluded that the trading action was subdued, but on the positive side.
The Nifty pared some of the intraday gains but managed to close above its crucial support level of 9,120. It rose to an intraday high of 9,143.90 which resulted in small upper shadow and slipped nearly 40 points to hit its intraday low of 9,102.65.
The momentum will accelerate on the upside once the index closes above its crucial resistance level of 9,218 and the 9,273 which is also its record high, suggest experts.
“Albeit Nifty registered a small bull candle, a positive close with very favorable Advance/Decline ratio after Hammer formation in previous trading session is certainly suggesting that bottoming out process is on,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.com.
“Besides, two of our momentum oscillators which have higher accuracy in catching short-term turning points once again generated buy signals. However, a critical test for bulls lies in conquering the highs of 9,218 levels on closing basis,” he said.
The Nifty index negated its formation of making lower lows seen in the last nine trading sessions and formed a Bullish candle on the daily chart. It made a short-term bottom at 9,075 with the occurrence of Bullish Hammer.
“The index will pick up momentum if it manages to hold above 9,135 for the next target of 9,218 and then towards 9,250 zone while on the downside supports are seen at 9090 then 9050 zone,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.com.
“The index is stuck in a broader trading range of 9075 to 9250 zone and now only a range breakout on either side would start the next major momentum in the market,” he said.
However, Taparia is of the view that short-term bullish reversal on the chart with stock specific buying interest indicates that bulls are not ready to lose their grip by looking at the major market trend.