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Technical View: Nifty forms Hanging Man pattern, index has to go past 13k for strong upmove

Mazhar Mohammad of Chartviewindia.in has asked traders to focus on stock-specific opportunities.

November 24, 2020 / 04:20 PM IST

The Nifty50 remained positive for most of the session and closed half a percent higher on November 23, backed by technology, metals, pharma and oil & gas stocks.

The index formed a small-bodied bearish candle which resembled the Hanging Man pattern on the daily charts.

A Hanging Man is a bearish reversal candlestick pattern usually formed at the end of an uptrend or at the top. In a perfect 'Hanging Man' pattern, there will either be a small upper shadow or no upper shadow at all, a small body and long lower shadow.

A strong upside is likely only if the index decisively surpasses the psychologically important 13,000-mark, say experts.

Traders should focus on stock-specific opportunities but a long side bet for the near term shall arise on a close above 13,000 for a quick target of 13,200, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

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The Nifty50 opened strong at 12,960.30 but saw some profit booking to hit the day's low of 12,825.70 in the morning trade. It rebounded immediately and gained strength to touch an intraday record high of 12,968.85. It closed at 12,926.50, up 67.50 points.

In the last nine trading sessions, it appears to be a struggle for the bulls along the upper boundary of the 45-day old ascending channel, Mohammad said. "For a sustainable upmove, the bulls need to push the indices beyond the upper boundary of the said channel that also coincides with the psychological resistance point of 13,000 levels," Mohammad said.

Based on long-term charts, upsides from current levels may remain capped in the 13,200 – 13,500 zone.

Certain momentum oscillators on both the daily and the weekly charts are heating up again, pointing to a capped upside for Nifty, he said.

Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments, also said the index is shying away from hitting the 13,000-mark.

"It is facing some resistance around the 12,950-12,970 levels but based on charts we should be able to achieve the levels of 13,100-13,200. Since we have a good support at 12,700, every dip can be utilised to accumulate long positions," he said.

Broader markets outperformed benchmarks. The Nifty midcap index rose 1.3 percent and the smallcap index gained 2 percent.

The weakness in banks capped the upside in the Nifty50. The Bank Nifty opened higher at 29,432.80 but could not sustain and closed 211.80 points lower at 29,024.20. The index formed a bearish candle on the daily charts.
Sunil Shankar Matkar
first published: Nov 23, 2020 05:13 pm
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