Technical View | Nifty forms bullish candle, 19,700 is the level to watch

Experts feel Nifty may face resistance at 19,800 in coming sessions

The Nifty made a smart comeback on October 10 as positive global cues and gains in realty names helped the Nifty close higher, wiping out the previous day’s losses. The market, for now, also seems to have taken the Israel-Hamas conflict in its stride.

The index opened higher at 19,566, which was also the day’s low, and gained as the day progressed. It hit the day’s high of 19,718 before closing at 19,690, up 178 points, or 0.91 percent from the previous day.

The index went past the previous week's high, decisively breaking out horizontal as well as downward sloping resistance trendline. It not only got back above the 50-day exponential moving average (EMA) of 19,560 but also the 20-day EMA (19,650) in a single session.

The index formed a bullish Opening Marubozu pattern, which indicates bulls' hold over Dalal Street, on the daily charts. The pattern resembles a long bullish candlestick pattern with minor upper shadow and no lower shadow on the daily charts.

A decisive move above the day’s high can take the index towards the 19,800-20,000 area in the coming sessions, with 19,300 acting as a crucial support, experts said.

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"A long bull candle was formed on the daily chart, which indicates an attempt of upside breakout of the hurdle after a small dip. The recent swing low of 19,333 could now be considered as a crucial bottom-reversal pattern for the short term," Nagaraj Shetti, technical research analyst at HDFC Securities said.

A decisive move above 19,700 levels will likely take the index towards 19,950-20,050 levels for the short term. Immediate support is at 19,550," he said.

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On the Options front, the maximum Call open interest was at 20,000 strike, followed by 19,800 strike, with Call writing at 20,100 strike, then 20,000 strike. The maximum Put open interest was at 19,600 strike, followed by 19,500 strike, with Put writing at 19,600 strike, then 19,700 strike.

The data suggests that the Nifty may face resistance at 19,800-20,000 in the coming sessions, with immediate support at 19,600-19,500 zone.

The Bank Nifty also recovered its previous day's losses and surged 474 points or 1.08 percent to 44,360, forming a long bullish candlestick with minor upper shadow on the daily scale.

The previous day's low of 43,800 may act as a support in coming sessions, with resistance at 44,500-44,700, a break of which same can take the index towards 45,000, experts said.

"The index has held on to the support zone of 43,800 – 43,700 where the previous swing low supports were placed," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.

He expects the pullback to continue till 45,000 over the next few trading sessions.

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