Technical View | Nifty forms Spinning Top pattern after reclaiming 18,300; indicators signal potential upside

Representative image.

The Nifty50 failed to hold on to the 18,300 mark and closed the rangebound session on a flat note despite weakness in global peers, forming a Spinning Top kind of pattern on the daily charts on May 9. After a day of strong bullish candlestick pattern, it continued to make higher highs and higher lows formation for the second consecutive session.

A spinning top is often regarded as a neutral pattern that suggests indecisiveness in the market. It can be formed in an uptrend as well as in a downtrend.

The Nifty50 opened above 18,300 and touched an intraday high of 18,344 but lost most of the gains in the last couple of hours of trade and finally settled the volatile trade with 1.6 points loss at 18,266.

Overall, the index traded within a tight range of 18,345 and 18,229 throughout the day, showing a lack of strong directional momentum.

"The index remained above critical moving averages, which could indicate underlying strength in the market. Additionally, the relative strength index (RSI) showed a positive crossover, suggesting bullish momentum," Rupak De, Senior Technical Analyst at LKP Securities said.

Overall, he feels the outlook for the Nifty index remains positive, with technical indicators signalling the potential for further upside. The sentiment remains positive until it falls below 18,200 decisively.

On the weekly Option front, we have seen maximum Call open interest at 18,300 strike, which is expected to be near-term resistance for the Nifty50, followed by 18,500 strike and 18,400 strike, with Call writing at 18,300 strike, then 18,400 strike.

On the Put side, the maximum open interest was at 18,200 strike, which can act as immediate support for the index, followed by 18,000 strike, with writing at 17,800 strike, then 18,300 strike.

“The Nifty index will continue to move up but at a gradual pace owing to the volume of Calls and Puts written not having much parity. The highest Put open interest is at the 18,000 level for the monthly expiry which will act as a strong support for the index," Rahul Ghose, Founder & CEO at Hedged said.

The Bank Nifty opened on a positive note of 43,439 and gradually extended its momentum towards 43,533 levels in the first half of the session. Later on, some profit booking was seen from higher zones and it closed at 43,198, down 86 points.

The index has formed a small bearish candle on the daily scale as it closed below its opening levels but experts feel the bigger trend with buy on dips stance is still intact.

"It needs to hold above the 43,000 mark to make an upmove towards 43,600 and then 43,750 levels, whereas on the downside, support is expected at 43,000 and 42,750 levels," Chandan Taparia, Senior Vice President, Analyst-Derivatives at Motilal Oswal Financial Services said.

Volatility cooled off initially but closed slightly higher and made the market movement muted. India VIX was up by 0.33 percent from 12.64 to 12.68 levels.