Technical View: Nifty forms a Bearish Belt Hold kind of pattern; stay long with target of 10,350

It slipped over 80 points to touch its intraday low of 10,054.20 which made a slightly long lower shadow. The index bounced back from its 5-days exponential moving average placed at 10,061 to close at 10,081.50, down 33 points.

Traders are advised to stay long and initiate buy on dips strategy towards any fall towards 10,000 levels. Although, Bearish Belt Hold is a trend reversal pattern but doesn't go short in this market because it still requires confirmation.

As long as Nifty trades above 10,000 levels, the upside remains intact and investors can initiate long positions for the next possible target placed at 10,350 and keep a stop loss 9,944.

“The Nifty registered a Bearish Belt Hold kind of formation as market participants appear to have read the RBI Monetary policy as a neutral event. However, it is imminent for the index to sustain above 10087 levels in next trading session to prevent damage to the short term trend,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“If it trades consistently below 10087 levels for at least one hour in next trading session then the market should witness selling pressure and the breach of 10054 levels on a closing basis may push the indices towards 9900 levels in the near term,” he said.

Mohammad further added that as momentum is very strong traders are advised to focus on stock specific opportunities as long as Nifty50 sustains above psychological mark of 10,000 on a closing basis and look for 10,350 kind of targets.

On the options front, maximum Put OI was seen at strike prices 10,000 followed by 9,800 while maximum Call OI was seen at strike prices 10,500 followed by 10,200.

Fresh Call writing was seen at all the strikes above 10,100 while no major Put writing was seen at any immediate strike which suggests that Put writers are taking one step back for next move.

“India VIX remained flattish for a second consecutive session at 11.94. Stable VIX post the RBI policy meet is ruling out any sign of major decline in the market,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“On the technical front, Nifty formed a Bearish Candle on the daily chart. Now, if it sustains below 10,050 then only a follow-up decline could be seen towards 10,020 and then towards 9,950 mark while a hold above 10120 could start the fresh leg of the rally towards 10250 zones,” he said.

Taparia further added that the index has been respecting to its rising support trend line by connecting the recent swing lows of 9543, 9646, 9838 and 9944 so the major trend is still intact even after a small decline from higher levels.