Technical View: Nifty forms strong bull candle; can rally towards 9,700-9,800

The D-Street made history on the day when Modi-led government completed its 3 years in office. The Nifty broke above 9,600 to hit its fresh record high of 9,604.90 on Friday, before closing the day 85 points higher at 9,595.10, making a strong bullish candle on charts.

A strong bull candle after a bullish candle suggests that bulls are in control of D-Street and any dips seen today were largely bought into. However, after such a sharp upmove this week, some bit of consolidation cannot be ruled out in the coming week, but the index is ripe to hit next crucial target of 9,700-9,800.

A strong Bull candle signifies that the market witnessed sustained buying interest from the bulls for the most part of the trading session. As long as Nifty50 holds above 9,520 levels, the rally could extend towards 9,700-9,800 levels, suggest experts.

The Nifty50 opened at 9,507.75 and rose to a record high of 9604.90 before closing the day 85 points higher from its previous close at 9,509.75. It slipped marginally to 9,495.40 which created a small lower shadow.

“The Nifty50 continued its strong momentum as it registered a new lifetime high with a strong bull candle. In this process it also registered a breakout above its 2-month-old ascending channel which is throwing up a new technical target placed around 9,800 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.com.

“However, some momentum oscillators on the longer term charts are at extremely overbought levels whereas on the weekly charts a Hanging Man is visible which can be a cause for concern in the immediate short term. Hence, as this rally progresses further, it will be prudent on the part of traders/investors to keep booking profits,” he said.

The Nifty started the new series on an excitement note and witnessed a strong rally of nearly 250 points in the last two sessions. It also negated its Shooting Star candle on the weekly charts and formed a Bullish candle, suggest experts.

It looks like the bulls have again taken the market in their tight grip after the consolidation seen in the last couple of days. The derivative data also suggest a move towards 9,700 is possible in June expiry.

On the options front, maximum Put OI was seen at strike price 9,400 followed by 9,300 while maximum Call OI is seen at strike prices 9,600 followed by 9,700.

Fresh Put writing was seen at strike price 9,500, 9400 and 9,600 which is shifting its support to higher zones while Call writing is shifting higher at 9600, 9,700 and 9,800 strikes, which is a bullish sign.

“The Nifty index continued its southward journey and made a new life high of 9,604 by surpassing its previous high of 9,532. It formed a strong Bullish Candle on the daily chart post its consolidation price volume breakout on expiry day,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“Now, supports are shifting higher and till it holds above 9,520, the rally could extend to 9,650 and 9,700 levels while on the downside supports are seen at 9,480 and 9,450,” he said.