A 'small bearish' candle is formed when the index trades lower, but within a defined range, throughout the session.
The Nifty failed to hold on to momentum and closed below its opening level on Tuesday making a small bodied or a bearish candle on the daily candlestick charts.
The index just closed above its crucial psychological support level of 9,650 but well above its short term moving averages suggesting selling pressure near its key resistance level of 9,700.
A 'small bearish' candle is formed when the index trades lower, but within a defined range, throughout the session. The length of the candle signifies the range for the day.
The Nifty index which opened at 9,670 rose to an intraday high of 9,676.50 which made a small upper shadow. The Bears regained control and pushed the index towards its support level of 9,650 as it touched its intraday low of 9,643.75.
The Nifty finally closed 4 points lower or 0.04 percent at 9,653.50.
The Nifty index failed to surpass immediate hurdle of 9,680 and traded in a smaller range of nearly 30 points. Traders are advised to stay long on the index with a stop below 9,600 as the market is going through periods of consolidation and a breakout should happen soon which could take it above 9,700.
“The Nifty formed a ‘small bodied’ candle and witnessed consolidation for the most part of the session then finally closed on a flattish note near to 9,650 zone,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“Now, it 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.
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 9,650 while major Call writing was seen at strike prices 9,700 and 9,750.
Recently, index gave the breakout from its falling channel on the lower degree chart but follow up is required to start the fresh up move in the market.
“It appears to be a day of consolidation on the bourses as Nifty moved in an extremely narrow range of 33 points. Back to back negative advance decline ratio should be a cause for concern suggesting weakness in the broader markets,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“But it is still an advantage to bulls as momentum oscillators on lower time frame charts are in buy mode and hence unless Nifty slips below 9600 levels, Bulls should not give up their bets and only aim at 9700 levels,” he said.Mohammad further added that once this critical resistance is taken off bigger upsides can be expected. Hence, we advise traders to remain cautiously optimistic with a stop below 9,600 levels on closing basis.