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Last Updated : Oct 01, 2020 08:29 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms Bullish Harami pattern on weekly chart; next target at 11,600

Mazhar Mohammad of Chartviewindia.in advises positional traders to look to buy the dip into the zone of 11,360 – 11,340 levels for a possible target of 11,590 with a stop below 11,290 levels.

Sunil Shankar Matkar

The Nifty50 started off the last day of the truncated week on a strong note and climbed 1.5 percent higher on October 1, backed by the US stimulus hopes, unlock 5.0 guidelines and increase in GST collection on a month-on-month basis. Banking and financials lifted the mood.

The index closed above the 11,400 mark and formed a bullish candle on the daily charts. It also formed a bullish candle which resembles a Bullish Harami kind of pattern on the weekly charts as it gained over 3 percent for the week.

Close

A Bullish Harami pattern is formed at the bottom of a downtrend or near a significant support zone. This pattern is made up of two candlesticks. On Day One, a long bearish candlestick is formed, while on Day Two a small bullish candle is formed. The bigger bearish candle of Day One and a comparably small one on Day Two represent a strong trend reversal.

As things are looking positive as of today, Mazhar Mohammad of Chartviewindia.in advised positional traders to look to buy the dip into the zone of 11,360 – 11,340 levels for a possible target of 11,590 with a stop below 11,290 levels.

The Nifty50 opened higher at 11,364.45 and hit an intraday high of 11,428.60. The index closed at 11,417, up 169.50 points or 1.51 percent.

The market will remain shut on October 2 for Mahatma Gandhi Jayanti holiday.

"Bulls signed off the truncated week in style as Nifty50 registered a Bullish Harami kind of formation on weekly charts after witnessing a strong gap up opening in Thursday's session. As bulls cleared near term critical hurdle present around 11,300 levels the rally in index can be expected to extend towards its logical target of 11,593 levels which is also close to the interim top of 11,618 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

If the index registers a sustainable close above the zone of 11,593 – 11,618 levels, then a retest of 11,794 can't be ruled out going forward, according to him.

Meanwhile, to retain a bullish stance, it remains critical for the bulls to sustain above 11,295 levels on the downside, as a close below the said support can resume the downswing by signalling the end of pull back swing, he feels.

Nifty index opened the gap up in line with strong global cues and gradually extended its gains towards 11,430 zones in the last hour of the session. It formed a Bullish candle on daily and weekly scale as strong buying interest is visible in most of the sector and heavyweight counters. It closed the day with the gains of around 170 points and holding well above its 50 DMA, which clearly shows a strong bulls’ grip in the market. The overall structure of the index is positive with buy on decline strategy as supports are gradually shifting higher. Now it has to continue to hold above 11,333 zones to witness a further up move towards 11,500 then 11,600 zones while on the downside major supports seen at 11,200 zones.

India VIX fell by 6.04 percent from 19.53 to 18.35 levels, which is giving comfort to start the fresh upmove in the market.

Option data suggested that the wider trading range for the Nifty would be 11,000 to 11,800 levels for the coming sessions.

On option front, maximum Put open interest was seen at 10,500 followed by 11,000 strike, while maximum Call open interest was at 11,500 followed by 12,000 strike. Marginal Call writing was seen in 11,400 and 11,700 strike while Put writing was seen at 11,400 then 11,000 strike.

Bank Nifty opened strong at 21,685.25 and witnessed strong momentum throughout the session to extend its move up to 22,293.75. It gained 794.20 points or 3.70 percent to close above its crucial 50 DEMA, at 22,246.

The index formed a big bullish candle on daily and weekly scale while finally negated the formation of lower lows - lower highs on the weekly scale.

"It relatively outperformed the benchmark index and supports are gradually shifting higher. Now it needs to hold above 22,000 to witness an upmove towards 22,500 then 22,750 while on the downside key support exists at 21,750 then 21,500 zone," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services told Moneycontrol.

Positive setup was seen in TCS, HDFC Bank, HDFC, Bajaj Finance, Asian Paints, ICICI Bank, Bajaj Auto and Tech Mahindra while weakness was seen in Dr Reddy's Labs, Hindalco, ONGC, ITC and BPCL, he said.
First Published on Oct 1, 2020 05:42 pm
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