Technical View: Nifty forms a bullish candle; 10,060 crucial for bulls

The Nifty closed above its crucial resistance level of 10,000 for the first time since August 7 and made a strong bullish candle on the daily candlestick charts.

A bullish candle that was formed on the daily charts on Monday after lacklustre trading in the past five trading session signifies that the market witnessed a breakout and a sustain close above 10,020-10,080 would open room for further upside till 10,137.

The Nifty opened at 9,971 and rose to an intraday high of 10,028.65 before closing the day 71 points higher from its previous close at 9934.80. It slipped marginally to 9968.80 which created a small lower shadow.

The Nifty index surpassed its immediate hurdle placed at 9,980 levels. It registered the highest daily close in last 23 trading sessions and managed to close above psychological 10,000 mark.

“The Nifty formed a bullish candle on the daily chart and supports are gradually shifting higher. Now, it has to continue to hold above 9980 zone to witness an up move towards 10050 and then towards 10080 levels while on the downside supports are seen at 9928 than 9880 levels,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

On the options front, maximum Put OI was seen at strike prices 9,900 followed by 9,800 and 9,700 while maximum Call OI was seen at strike prices 10,000 followed by 10,200.

Option data suggests a shift of the support to the upside and Call unwinding in 9900 and 10000 strikes is also giving the scope for upside movement, suggest experts.

Meanwhile, India VIX fell down by 4.63 percent at 12.63. Now, if VIX sustains below 12.50 zones then index could see an up move towards its life time high territory, they say.

The Nifty closed above most of its short term moving averages. The market breadth was healthy and almost 100 stocks hit their fresh 52-weeks high on the NSE compared with 17 stocks which hit their respective 52-week low on Monday.

The Nifty closed at 1-month closing high, while midcap index too closed at a record closing high on Monday. However, traders are advised to remain cautious as negative divergence on momentum oscillator is still pointing towards corrective upward rally.

“The Nifty appears to have witnessed a breakout but still an over lapping price behaviour from the lows of 9685 with a negative divergence on momentum oscillator is still pointing towards corrective upward rally and hence traders need to remain cautiously optimistic,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“A real thrust to Nifty may come if it closes above 10,060 levels in next trading session which eventually should lead to retest of 10,137. Traders are advised not to get carried away by this single day’s up move and maintain a tight stop below 9968 levels and look for initial target of 10088,” he said.