Sep 07, 2017 05:08 PM IST | Source:

Technical View: Nifty forms 'Spinning Top' kind of pattern; keep a stop below 9,861

This market needs fresh triggers for a breakout to happen while a breakdown below 9,880 could intensify selling pressure.

Kshitij Anand @kshanand

The Nifty50 opened with a mild gap but failed to keep the momentum going and closed below its opening level on Thursday which made a small bodied candle which closely resembles that of a 'Spinning Top' kind of pattern on the daily charts.

This candle is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears and can be formed in an uptrend as well as in a downtrend.

This market needs fresh triggers for a breakout to happen while a breakdown below 9,880 could intensify selling pressure.

The index bounced back from its 5-day exponential moving average (DEMA) placed at 9,922 level to finally close at 9,929. It hit an intraday low of 9,917.20 and a high of 9,964.85.

Investors are advised to wait for a breakout to initiate fresh positions, but until that time a tight stop loss can be placed at 9,861 for all the long positions, suggest experts.

“The Nifty50 continued its lackadaisical price behaviour as it moved in an extremely narrow range of 47 points before signing off the day with a Spinning Top kind of indecisive formation,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

“Trend in the near term shall continue to remain directionless unless the indices breakout the zone of 9988–9861. Traders are also advised to look out for Bank Nifty which is underperforming as it failed to cross the interim top of 24,496 level besides moving in extremely narrow range,” he said.

Mohammad advises traders to put a tight stop below 9,861 for their long positions.

India VIX fell down by 0.86 percent at 13. India VIX has to cool down below 12.50 for a range breakout from recent consolidation phase, suggest experts.

On the options front, maximum Put OI was seen at 9,700 and 9,800 strikes while maximum Call OI is was seen at 10,000 followed by 10,100 strikes.

Fresh Put writing was seen at 9,800 and 9,900 strikes while fresh Call writing was seen at 10,000 and 10,100 strikes.

“Put writing at 9,900 strikes suggests support near to 9,880 zones while intact Call writing could restrict its immediate upside to 9,980-10,020 zones,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“The Nifty formed a small candle and got stuck in the broader trading range of 9,850 to 9,980 zones from last seven trading sessions. It has to continue to hold above 9,928 zones to witness an up move towards 9,980 while on the downside supports are seen at 9,880 then 9,850 levels,” he said.
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