Technical View: Nifty forms a ‘Doji’ candle; Mount 10K now in sight

The Nifty50 which opened with a gap on the upside failed to keep the momentum going as the index closed near its opening level forming a ‘Doji’ kind of pattern on the daily candlestick charts on Monday.

After a volatile week, Nifty started on a positive note and reclaimed its crucial psychological resistance level of 9,900 and 20-days exponential moving average (DEMA) placed around 9,873 which is a positive sign for the bulls.

A 'Doji' is formed when the index opens and then closes approximately around the same level. The candle appears like a cross signs because there is a wide movement on either side.

A 'Doji' is a neutral chart pattern and traders should base their investment decision based on today’s price movement and see how the index behaves in the next few sessions.

The Nifty50 opened at 9,907.15 and closed at 9,912.80 thus forming a ‘Doji’ pattern. It rose to an intraday high of 9,925.75 making a small upper shadow and fell to an intraday low of 9,882 which made the long lower shadow.

The Nifty index opened positive and rose for the fourth consecutive session in a row. It has been making higher lows from the last four trading sessions.

For the momentum to continue the index must hold above 9,880 and close above 9,948 which would open room for further upside towards Mount 10K, suggest experts.

“The Nifty50 registered a Doji kind of indecisive formation after moving in a narrow range of 43 points suggesting that it is not yet out of the woods. Hence, the immediate course of action for bulls should be to take off 9948 levels and push the indices towards 10,000 mark,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“If the index trades below 9948 levels, the threat of resuming the sharp correction continues to loom large on the market participants. We advice traders to remain cautious and avoid long positions for time being till 9,948 is decisively crossed,” he said.

On the options front, maximum Put OI was seen at strike process 9,800 followed by 9,500 while maximum Call OI was seen at strike prices 10,000 followed by 9,900.

Significant Put writing was seen at strike prices 9,900 strikes could hold its immediate support while major Call writing was seen at strike prices 9,950 which could restrict its up move to 9980-10020 levels.

“The Nifty has formed a Northern Doji candle followed by a gap up opening. Now, it has to cross and hold above immediate hurdle of 9,928-9,950 zones to witness an up move towards 10020 and 10050 while a hold below 9880 could drag it towards 9,820 and then towards 9,775,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.