Mazhar Mohammad of Chartviewindia.in said in next trading session if Nifty slips below 11,370 kind of levels then it may set the tone for near term weakness in the index.
Nifty50 after a day of consolidation saw renewed buying interest on Friday and closed at fresh six-month high, driven by banking & financials and technology stocks.
The index formed bullish candle which resembles a shooting Star kind of formation on daily charts and robust bullish candle on the weekly scale.
The Nifty extended weekly gaining streak to 4 weeks in a row and climbed 3.5 percent for the week, backed by consistent FII inflow, and hope of stable government & rate cut.
A 'Shooting Star' pattern is formed when the index comes under selling pressure as traders start booking profits at higher levels.
This pattern is usually formed in an uptrend and is treated as a reversal pattern, but it would require confirmation before we can conclude that the trend will get reversed in near future.
As the market is in overbought zone after consistent rally, there could be some profit booking in coming sessions, experts said, adding after consolidation, the next target for Nifty could be 11,500 levels.
The Nifty50 after opening higher at 11,376.85 extended gains as the day progressed and hit an intraday high of 11,487, but saw some profit booking in late trade and closed off day's high. The index was up 83.60 points at 11,426.90.
"Nifty50 registered a bullish candle but with slightly longer upper shadow which resembles a Shooting Star kind of formation whereas on weekly charts a robust bull candle is seen," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said Nifty closed way above its Upper Bollinger Band on weekly charts which led to either correction or pause in the past. Hence, in next trading session if Nifty slips below 11,370 kind of levels then it may set the tone for near term weakness in the index, he added.
Contrary to this, sustaining above 11,370 levels the Nifty can make an attempt to target the zone of 11,550–11,600 levels in the week ahead, according to him.
Mazhar Mohammad said but as multiple parameters are suggesting that Nifty is getting stretched on the upside either a pause or correction going forward can't be ruled. Hence, he advised short term traders to maintain neutral stance on index and should shift their focus to stock specific opportunities.
However, the broader markets were mixed as the Nifty Midcap index gained 0.65 percent while Smallcap index fell 0.5 percent amid weak breadth.
"Despite momentum in the index remained strong advance decline ratio favoured bears as more number of stocks declined suggesting profit booking in the broader markets at higher levels," Mazhar said.
India VIX moved up by 4.72 percent to 15.86 levels.
On Option front, maximum Put open interest (OI) is at 11,000 followed by 11,200 strike while maximum Call OI is at 11,500 followed by 11,400 strike.
Meaningful Put writing is at 11,400 followed by 11,500 strike while Call writing is at 11,700 strike.
Option band signifies a shift in higher trading range in between 11,300 to 11,600 zones, experts said.
"Nifty index is forming higher-highs higher-lows from past five trading sessions. It formed bullish candle on weekly chart which suggest that bulls are holding tight grip in the market," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited told Moneycontrol.
He said on immediate basis index has to continue to hold above 11,333 zone to extend its upmove towards 11,500-11,550 zones while on the downside support exits at 11,333 then 11,280 zones.
Bank Nifty opened positive and hit a fresh life-time high of 29,520 mark and managed to hold above 29,000 zones. The index has been making higher-highs higher-lows from past five trading sessions which indicates bullish momentum.
It closed 458.35 points higher at 29,381.45 and formed a bullish candle on daily as well as weekly scale."Now it has to continue to hold above 28,888-29,000 zones to extend its momentum towards new life-time high of 29,700 zones while on the downside major support exists at 29,000 zones," Chandan Taparia said.