Moneycontrol
Jun 19, 2017 04:54 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms bullish candle; 9709 crucial for momentum to continue

The big move could also be a result of short covering which propped the index towards 9,700. This was evident from the advance-decline ratio which sits at 99 issues advancing compared with 112 declining.

Technical View: Nifty forms bullish candle; 9709 crucial for momentum to continue

Kshitij Anand

Moneycontrol News

Bulls led the charge on D-Street as the Nifty closed above its two crucial resistance level i.e. 9600 and 9,650 in one trading session on Monday. The index closed above its crucial short-term moving averages and made a bullish candle on the daily candlestick charts.

However, bulls failed to keep the momentum going and pared gains slightly to close the day at 9,657, up 69 points. At a time when most market experts were anticipating consolidation to happen, Nifty50 gave a big surprise on the first trading session of the week.

The big move could also be a result of short covering which propped the index towards 9,700. This was evident from the advance-decline ratio which sits at 99 issues advancing compared with 112 declining.

The momentum is likely to strengthen further once it crosses Nifty50 record high placed at 9,709.30. Today’s move negated the formation of lower top – lower bottom and given the upside breakout from its falling channel on the hourly scale.

The Nifty50 opened at 9,626.40 and rallied to its intraday high of 9,673.30. It slipped slightly in the opening morning to 9,614.90 but finally closed 69 points higher at 9,657.

“It was heartening to see Nifty50 rallying as a follow up to the positive chart formations developed in Friday’ trading session. After Monday’s price action our twin momentum oscillators generated buy signals,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“But, the only concern is that this rally is on the back of negative advance decline ratio. The real challenge for bulls remains in taking off the top placed at 9,709 and if that is conquered on closing basis then next targets can be projected around 9,830 levels,” he said.

Mohammad further added that the bigger target looks quite possible if Nifty50 crosses the level of 9,709 before next 8 trading sessions. If that happens then it not only confirms the end of correction at the recent low of 9,560 but we can easily expect bigger targets going forward.

On the options front, maximum Put OI was seen at strike prices 9,500 and 9,600 while maximum Call OI was seen at strike prices 9,700 and 9,800.

Fresh Put writing was seen at strike prices 9,700 and 9,600 while major Call unwinding was seen in 9,600, 9,650 and 9,700.

“Fresh Put writing and Call unwinding at ATM strike suggests that Put writer has taken the market in their grip and a follow-up activity may take it to a new lifetime high territory,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“The Nifty50 index has to continue to hold above 9,620 zone to witness an up move towards its lifetime high of 9,709 and 9,750 mark while on the downside supports are seen at 9,580 and 9,550,” he said.

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