Technical View: Nifty forms bullish candle ahead of F&O expiry; remain long

The Nifty50 closed above its crucial resistance level of 10,000 for the first time on Wednesday and made a bullish candle on the daily candlestick charts negating bearish belt hold pattern formed in the previous trading session.

A bullish candle formed on the daily chart today signifies that the market witnessed sustained buying interest from the Bulls for the most part of the trading day which is a bullish sign.

The index rallied to a fresh record high of 10,025.95 and ended at a fresh closing high of 10,020.65 which opens up the window for target above 10,200-10,300, suggest experts.

Investors are advised to stay long as there could be a possibility of short covering ahead of July F&O expiry on Thursday. Investors can maintain long positions for an immediate target of 10,050-10,100 and place a stop below 9949 levels, suggest experts.

“The Nifty50 signed off the day in style with a close above 10,000 marks which also witnessed a breakout above its 3-month old ascending channel on the daily charts,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“This breakout is throwing up a new target placed around 10,350 levels besides negating the bearish formations witnessed in Tuesday’s trading session suggesting strong momentum on the upside,” he said.

Mohammad advises traders to maintain positive bias as long as Nifty50 sustains above 10,000 with a stop below 9949 levels on closing basis.

Thursday happens to be the expiry day for July F&O contracts. The outcome of the US Fed meeting could well decide the fate of 10,000 level on Nifty. A more hawkish Fed could well lead to index testing its support levels.

On the options front, maximum Put OI was seen at 9,900 while maximum Call OI was seen at 10,000 followed by 10,100 strikes. Fresh Put writing at 10,000 and 9900 strikes while Call unwinding was seen at 9900, 9950 and 10,000.

“Put writing at 10,000 strike and fresh Call writing at 10050 and 10100 strikes suggest a scope towards 10100 zones while 9980 could act as an immediate support as per option data,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“The Nifty managed to give a remarkable close above 10,000 mark ahead of July series F&O expiry. It formed a bullish candle and a hold above 10,000 could continue its up move towards 10,050 and 10,100 led by short covering activities. On the downside supports are seen at 9,980 and then towards 9,928 levels,” he said.

The Nifty is up by around 5.44 percent in this series and trading higher by 200 points from its volume weighted average of 9800 zone.

Taparia further added that the index has been making higher top – higher bottom formation and till it doesn’t slip below 9928 mark, the trend may remain intact for a fresh upside momentum.