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Technical View | Nifty forms long-legged Doji pattern, experts see reversal on upside

If the index manages to go past the day's low of 16, 864, it can initially move to 17,200 and the 17,400-17,500 area, experts said

March 16, 2023 / 05:35 PM IST
Representative image.

Representative image.

The Nifty remained volatile and closed with moderate gains on March 16, snapping a five-day losing streak, supported by FMCG, banking & financial services, auto, pharma and oil & gas stocks.

The rally in European counterparts after Credit Suisse decided to borrow around $54 billion from Swiss National Bank also supported the sentiment but the correction in Asian peers capped the gains.

The index opened higher at 16,995 but corrected to 16,850 in the initial hour of trade. The index recovered from the day’s low to remain range-bound for the remaining session.

It rose 13.4 points to 16,986 and formed a long-legged Doji candle on the daily charts, as the closing was near the opening levels, indicating indecisiveness among buyers and sellers about the future trend.

The day’s low may act as a support in the coming session and can move to 17,200 levels followed by 17,400-17,500 area, which coincides with the 200-day simple moving average (SMA) of 17,450, experts said.

"Normally, formation of Long Legged Doji type candle pattern displays high volatility in the market and such formations post reasonable weakness could be considered as a reversal pattern on the upside after confirmation," Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.

The larger degree lower tops and bottoms continued in for the third consecutive session.


"Thursday's swing low of 16,850 levels could be considered as a new lower bottom of the sequence. Further upside from here could confirm this reversal pattern and that could possibly open a sustainable upside bounce for the short term. A decisive move above the immediate hurdle of 17,200 is expected to bring strong bounce in the market ahead," Shetti said.

Options data indicates that 16,800 may act as support in the near term, while 17,000 seems to be crucial for move towards 17,300 and 17,500.

On the monthly Options front, the maximum Call open interest was at 18,000 strike followed by 17,500 and 17,000 strikes, with Call writing was at 17,000 strike, then 17,400 and 17,300 strikes.

On the Put side, we have seen maximum open interest at 17,000 strike, followed by 16,500 strike, with writing at 17,000 strike, then 16,500 strike.

Banking index

The Bank Nifty also closed with moderate gains of 81 points at 39,133 after a volatile session and formed a Doji pattern on the daily scale.

The index formed lower lows for the fifth session in a row. If it stays below 39,400, weakness can be seen towards 38,888 and 38,500. On the upside, hurdles shifted lower to 39,400 then 40,000, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

The India VIX, which indicates volatility expected over the next 30 days, fell 0.47 percent from 16.30 to 16.22 levels. Overall, volatility is consolidating near 16 zones for the last three sessions.

Disclaimer: The views and investment tips expressed by experts on are their own and not those of the website or its management. advises users to check with certified experts before taking any investment decisions.

Sunil Shankar Matkar
first published: Mar 16, 2023 05:35 pm