Technical View: Nifty forms bearish candle after hitting record high; 10,131 crucial for bulls

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The Nifty50 which rose to a record high in opening tick came under pressure on Tuesday and closed in negative terrain thus making a bearish candle on the daily candlestick charts.

The Nifty50 which opened at 10,175.60 rose to a record high of 10,178.95 but bears took control of market which pushed the index towards its intraday low of 10,129. It closed 5 points lower at 10,147.

Formation of a bearish candle after a bullish candle is a sign of caution and does not augur well for the bulls. But, bulls managed to push the index higher as it closed 18 points off from its intraday low.

The important level to watch put is Monday’s gap of 10,115-10,131 and a break below this gap could fuel selling pressure, suggest experts. However, if everything goes well on the global front and US Fed does not sound hawkish, Nifty50 is on track to touch 10,200.

“The Nifty 50 partially filled its recent gap up a zone of 10,115-10,131 and requires a follow-up move to extend its positive momentum. It formed a small Bearish candle but bulls are still holding their grip on the market,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“The index has to continue to hold above 10,138 to extend its move towards 10,200 then 10,270 zones while on the downside supports are seen at 10,080 and 10,050 zones,” he said.

India VIX slightly moved up by 0.22 percent at 11.46 and overall lower volatility with higher Put Call Ratio is supporting the bullish bias of the market.

On the options front, maximum Put OI stood at 10,000 strikes while maximum Call OI was seen at 10,200 followed by 10,300 strikes.

Fresh Put writing at 10,100 strike which indicates that index could continue to remain in the new high territory while intact Call writing at 10,200 is giving a small pause for further upside momentum, suggest experts.

“The market witnessed extremely range bound move of around 48 points is clearly suggesting the cautious mood of the market participants ahead of Federal Reserve outcome,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

Technically speaking, lack of follow through to the gap up the opening of the previous trading session is certainly a cause for concern at higher levels.

“In the near term, it is critical for the bulls to sustain above the gap zone of 10,131 – 10,115 registered in Monday’s session. Breach of this level can be considered as an initial sign of weakness whereas selling pressure shall get accelerated on a close below 10,043. Contrary to this on a close above 10,223 levels, Nifty50 shall target 10329 kinds of levels,” said Mohammad.