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Feb 12, 2018 04:54 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms small bullish candle; keep a stop below 10,398

“Albeit Nifty50 registered a small bullish candle it appears to be on a pullback mode after testing its 100-days moving average (DMA) in the preceding two trading sessions of last week,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

Kshitij Anand @kshanand

After a 3 percent drop in the previous week, bulls managed to regain control of D-Street on Monday with Nifty50 rising above 10,500. The index formed a small bullish candle on the daily candlestick charts which suggest that the rally could extend towards 10,700.

Investors are advised to stay cautious but technical indicators are suggesting that the pullback move could extend by another couple of trading sessions. The index closed below its key short-term moving averages such as 50-days exponential moving average (DEMA), and 5-DEMA.

The Nifty50 which opened at 10,518.20 rose to an intraday high of 10,555.50. It slipped marginally to hit an intraday low of 10,485.40 before closing 84 points higher at 10,539.75.

“Albeit Nifty50 registered a small bullish candle it appears to be on a pullback mode after testing its 100-days moving average (DMA) in the preceding two trading sessions of last week,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“As momentum oscillators are slowly turning into the positive zone thereby generating buy signals on lower time frame charts ideally this rally should get extended for a couple of trading sessions unless there is going to be a shift of sentiment in global markets once again on the negative side,” he said.

Momentum in the index shall get accelerated once it sustains above 10,636 levels. In such a scenario it should test the gap zone of 10,702 – 10,736 registered on February 5, but bigger rally should be expected only on a close above 10,736.

For time being, Mohammad advises traders to put a stop below 10398 levels on a closing basis and ride this up move.

India VIX fell down by 7.01 percent at 17.88. The decline in volatility has given a comfort to bulls for a bounce back move.

On the options front, maximum Put open interest was seen at 10,000 followed by 10,500 strikes while maximum Call OI was seen at 11,100 followed by 11,000 strikes.

Put writing was seen at 10,300, 10,400 and 10,500 strikes which are shifting its support to higher levels whereas Call Writing is seen at 10,600, 10,700 and 10,500 strikes. Option band signifies a broader trading range between 10,450 to 10,700 zones.

“The Nifty has been taking support at it rising trend line by connecting swing lows of 9687, 10,033, 10,074 and 10,333 zones,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“Now, it has to continue to hold above 10500 zones to witness an up move towards 10,650 while a hold below 10480 could attract the next leg of decline towards 10,400-10,350 zones,” he said.
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