Kshitij Anand Moneycontrol News
The Nifty50 which started on a flat note gained momentum and reclaimed its crucial resistance level of 10,800 but last hour selling pushed the index below this level to close at 10,772. The index formed a ‘Shooting Star’ kind of pattern on the daily charts and a “hammer’ kind of pattern on the weekly scale.
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.
The Nifty50 took support at its 13-EMA and the bounced back to close at 10772. It hit an intraday low of 10,735 and an intraday high of 10,816.35.
Investors are advised to remain cautious till the time a clear trend emerges. For a decisive breakout to happen, Nifty50 has to close above 10,930 and on the downside 10,600 is a crucial support and a breach of which could extend selling pressure.
“The Nifty50 registered a Shooting Star kind of formation as once again it witnessed a mild profit booking from day’s high of 10,816 as it failed to negotiate the resistance point of the down sloping trendline which is in progress from the highs of 11,171 with multiple touch points,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Hence, with the passage of time, it becomes very critical for the bulls to register a breakout above the said trendline to usher in a bigger upswing. Unless that happens the threat of moving towards the lower end of trading range around 10600 still looms large,” he said.
However, price behaviour on the weekly charts throughout the current consolidation phase of around 8 weeks is suggesting that intra week dips are getting bought into as happened on multiple occasions in this consolidation zone of 10,900 – 10,550 levels.
Mohammad further added that even from Elliot Wave perspective if a contracting triangle is in progress from the highs of 10930, in that case, the next couple trading sessions market should be under mild pressure for couple of trading sessions as it culminates the last leg of this corrective structure in the form of Wave E and should register a higher bottom above 10560 levels which should ultimately pave the way for a big breakout.
India VIX fell down up by 1.11 percent at 12.45 levels. VIX has been falling down from the last four trading sessions and lower volatility indicates limited downside in the market till it remains below 13.50 zones.
On the options front, maximum Put OI is placed at 10,600 followed by 10,700 strikes while the maximum Call OI is placed at 10,800 followed by 11,000 strikes. Option bank signifies an immediate trading range in between 10660 to 10835 zones.
Bank Nifty has got stuck in the range from 26,000 to 26,800 zones for the last 24 trading sessions and requires a decisive range breakout to commence the next leg of the rally.
“Bank Nifty formed a high wave Long Legged Doji candle on the daily scale and finally closed near to 26500 zones. It has to continue to hold above 26500 zones to witness an up move towards 26750 zones while a hold below 26400 could drag it towards 26250 then 26100 levels,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“On Nifty, the absence of follow up buying is visible in the market with sustained supply near to hurdle zones. It has to continue to hold above 10777 zones to extend its move towards 10835 then 10888 while a drift below 10740 - 10735 zones could drag it towards 10700 then 10660 zones,” he said.
Taparia further added that on the weekly scale, index formed an inside bar and a Hammer candle but at the same time it is forming lower highs from last three weeks.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
