Tech View: Profit booking flattens Nifty; intraday chart shows bearish candle

The Nifty50 witnessed a gap-up opening on Friday, but bulls failed to keep the momentum going as traders preferred to book profits at higher levels. The index formed a bearish candle on an intraday basis as the closing level was lower than the opening level.

However, if we compare Thursday’s close of 9,153.70 is still lower than Friday’s closing level of 9,160.05. It is a neutral pattern and it is still a buy on dips markets as long as Nifty50 holds 9,000-9,050 levels.

The Nifty50 opened at 9,207.80 and rose to a record high of 9,218.40. It then slipped 65 points to touch a low of 9,147.60, before closing the day at 9,160, up 6 points.

Overall, the index has been making higher top and higher bottom formation while the supports are shifting higher from 9,075 to 9,119 on an immediate basis which is giving confidence to the bulls.

“The Nifty50 made a bearish candle on an intraday basis, but the major market trend may remain positive till it hold above psychological 9,000,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

The Nifty50 failed to hold on to gains as it signed off the day near its intraday low of 9,147.60, However, it closed with mild positive gains when compared with previous session’s close which is a bullish sign.

Traders who are long on the index should continue to maintain their long positions as the price action suggests fresh record highs next week. But, the relative strength index (RSI) is suggesting overbought zone; hence, bouts of profit booking cannot be ruled out, suggest experts.

“This price action is clearly suggesting that the market participants were actively considering profit booking which may force the indices to cool off in next few trading sessions due to aggressive profit booking,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

Traders should remain net long on the index till it holds 9,100-9,000 levels on the closing basis because once Nifty50 breaks out of 9200 on a closing basis, the next target will be in the range of 9,300.

“Initial supports for the index can be expected in the zone of 9,128 – 9,106 levels where fresh buying can be initiated as trade set up is positively biased.  However, once Nifty50 decisively trades above 9,200 levels then it can easily aim at 9,350 kind of targets,” he said.