For time being, Mazhar Mohammad advised traders to create fresh longs in index only on a breakout above 11,843
Nifty recovered from first hour's sell-off and strengthened as the day progressed to end near day's high on June 25 after. The gain comes after losses in the previous two sessions.
Advancement of southwest monsoon and stability in crude oil prices lifted traders sentiment.
The index took support at its 50-DEMA, near 11,650 and rallied towards 11,814 intraday, forming bullish candle that resembles Bullish Engulfing pattern on daily charts.
Bullish Engulfing is an important bottom reversal pattern. It appears after a downtrend. It's a two candlestick pattern, a large white candle completely engulfs the preceding small black candle.
It's an important bullish reversal signal, but the index has to break its 200 points range seen for last several sessions, experts said, adding if it breaks that range on the upside, then 12,000 can be possible.
Nifty opened marginally lower at 11,681 and hit an intraday low of 11,651, but after an initial hour, the index gained strength and rallied as the day progressed to hit a day's high of 11,814.40. It closed 96.80 points higher at 11,796.50.
"It was heartening to see Nifty50 smartly recoiling after testing its 50-day exponential moving average (11,674) from an intraday low of 11,651 before signing off the session with a Bullish Engulfing pattern," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
According to Mohammad, in case Nifty fails to register a breakout above 11,843 then it can continue to move inside the 200-point range and can eventually once again slip towards 11,650.
For time being, he advised traders to create fresh longs in the index only on a breakout above 11,843.
India VIX fell 0.36 percent to 15.16.
For Nifty options, maximum Put open interest (OI) was at 11,700 followed by 11,600 while maximum Call OI was at 12,000 followed by 11,800. Meaningful Put writing was seen at 11,700 followed by 11,750 while Call unwinding was seen at all the immediate strikes.
Experts feel fresh Put writing with a shift in Put OI congestion to higher strike suggests a trading range of 11,700-12,000.
Bank Nifty managed to hold its support of 30,500 and gradually extended its gains towards 30,900. The index closed 245 points higher at 30,847.05 and formed a Bullish Engulfing candle on the daily scale as it regained the losses of the previous session."Now it has to continue to hold above 30,600 to extend its move towards 31,000, then 31,313, while on the downside, supports are seen at 30,600, then 30,250," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.