Mazhar Mohammad of Chartviewindia.in said in next session if market closes in a positive zone then it shall act as a trend reversal sign in favour of bulls which shall get further strengthened if Nifty manages a close above 10,722 levels.
The Nifty50 after its positive move from morning, caught in bear trap in late trade and closed lower for eighth consecutive session on Tuesday.
Pakistan Prime Minister Imran Khan's comments saying the country will retaliate if India launches military strikes in the aftermath of the Pulwama terror attack dented market sentiment in late trade.
The index formed bearish candle, which resembles a 'Inverted Hammer' kind of pattern on the daily charts.
Usually an Inverted Hammer in a downtrend is considered as a bullish reversal sign as long upper shadow is considered as the result of a pessimism surrounding the market due to downtrend which results in a sell-off at intraday highs.
The Nifty50 after a flat opening at 10,636.70 traded higher and touched an intraday high of 10,722.85, but the sell-off in late trade dragged the index to day's low of 10,585.65. The index was down 36.60 points to close at 10,604.40.
"Nifty50 registered an Inverted Hammer formation as market lost its ground post lunch session perhaps owing to comments from 'enemy nation' which appears to have spooked the intraday rally of a market which was otherwise looking somewhat positive with decent intraday gains," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said in next session if market closes in a positive zone then it shall act as a trend reversal sign in favour of bulls which shall get further strengthened if Nifty manages a close above 10,722 levels.
Besides, if bulls manages to defend 10,583 levels on intraday basis then there can be a chance of possible double bottom formation around these levels, according to him.
He said contrary to this breach of 10,580 shall drag down the indices towards 10,480 kind of levels. Considering the swift movement of the market in both directions it looks prudent for traders to adopt a neutral stance and wait till stable signs are visible, he added.
India VIX moved up by 2.6 percent to 18.46 levels.
On option front, maximum Put open interest (OI) is at 10,400 followed by 10,500 strike while maximum Call OI is at 11,000 followed by 10,800 strike.
Minor Put Writing is at 10,300 followed by 10,500 strike while Call writing is at 10,700 then 11,000 strike.
Option band signifies a lower shift in the trading range in between 10,550 to 10,850 zones, experts said.
"Now till the Nifty index holds below 10,750 zones it can slip towards 10,500 zones while on the upside hurdle is seen at 10,720 then 10,777 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Bank Nifty managed to extend its gains towards 27,000 zone but failed to hold above the same and drifted nearly 300 points from its intraday high.
The index closed 30.60 points higher at 26,684.85 and formed an Inverted Hammer on a daily scale which suggests that bears are putting pressure at higher levels."Now till it holds below 26,850 zone it could drag towards 26,400 then 26,250 zones while on the upside hurdle is seen at 26,850 then 27,000 zones," Chandan said.