Mazhar Mohammad advised traders to create fresh long positions in index with a stop below 11,430 on closing basis and look for initial targets placed around 11,800.
The Nifty 50 remained rangebound early in the day before gaining momentum and closing near day's high on October 17. Market sentiment was lifted by news of the European Union (EU) and the United Kingdom agreeing on a Brexit deal, and back home Finance Minister Nirmala Sitharaman's assurance to international investors that government was working to bring reforms.
The index formed a bullish candle on daily charts and almost approached the resistance point of a downsloping trendline which is in progress from the highs of 12,103 registered on June 3 whose value for next session is placed around 11,630 levels.
Experts feel if the index crosses 11,630 in the coming session, then there could be strong buying interest which may confirm fresh leg of upswing.
"Nifty50 registered a decent bullish candle which appears to have strengthened the prevailing bullish sentiment further. The significance of downsloping trendline stems from the fact that Nifty recently witnessed selling pressure after testing the same trendline with a high of 11,695 levels registered on September 23. Hence, a decisive close above this trendline shall confirm that a fresh leg of the upswing is in progress from recent lows of 11,090 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
In such a scenario recent high of 11,695 will be eventually taken off paving the way for bigger upswing, he said.
The Nifty50 opened flat at 11,466.30 and touched an intraday low of 11,439.65 amid rangebound trade, but gained momentum in the last couple of hours of trade and hit a day's high of 11,599.10. The index closed 122.40 points or 1.07 percent higher at 11,586.40.
However, on the downsides, Mazhar Mohammad said 11,439 shall assume the importance of critical support for the near term as a breach of this on the closing basis can once again catapult the short term trend in favour of bears.
For time being, he advised traders to create fresh long positions in index with a stop below 11,430 on a closing basis and look for initial targets placed around 11,800.
Option data suggests the shift in trading range for Nifty to 11,400 to 11,700 levels.
On the monthly options front, maximum Put open interest is at 11,000 followed by 11,400 strike while maximum Call open interest is at 12,000 followed by 11,500 strike.
Put writing was seen at 11,400 then 11,500 strike while Call unwinding was seen at all the immediate strikes with marginal Call writing at 11,600 strike.
India VIX fell by 2.95 percent at 15.87 levels.
Bank Nifty finally surpassed its consolidation band of 27,500 to 28,800 levels after nine trading sessions and closed at 28,989.45, up 1.58 percent, forming a bullish candle on the daily scale as buying interest was seen at the latter part of the session and started to formed higher highs – higher lows for past three sessions."The index has to continue to hold above 27,750 levels to extend its gains towards 29,250 then 29,500 while on the downside supports are seen at 28,500 then 28,250 levels," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.