Technical View: Nifty forms a solid bull candle; use dips to buy on Friday
Bulls made a strong comeback and any weakness in Friday’s session could be used as a buying opportunity. However, a break below its 50-DEMA could turn towards bears, suggest experts.
The bulls remained in control of D-Street from the word go. The index which started with a gap on the higher side went on reclaiming 10,200 with gains of nearly 100 points. The Nifty index made a solid bullish candle after three consecutive bearish candles.
Bulls made a strong comeback and any weakness in Friday’s session could be used as a buying opportunity. However, a break below its 50-DEMA could turn towards bears, suggest experts.
We mentioned in our yesterday’s column that a bounce back is on cards given the fact the Nifty is trading near its crucial support area around 10,000. The rally could well extend towards 10,300 before taking a breather.
The Nifty opened at 10,152 and slipped marginally to hit its intraday low of 10,139. But, then bulls took control and pushed the index above 10,200 to hit an intraday high of 10,232. The index closed 96 points higher at 10,214.
“Bulls made a strong come back as Nifty50 registered a solid bull candle from the oversold levels witnessed in last trading session. This kind of pull back after 5 days of fall was pretty much on the cards and hence this should not be construed as resumption of uptrend with immediate effect as multiple technical parameters are slowly deteriorating on higher time frame charts,”
Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.
“Nevertheless, this pullback attempt shall last a couple of trading sessions more as some of the key momentum oscillators on lower time frame charts are in buy mode. Hence, this leg of upmove shall ideally get extended up to 10335 levels,” he said.
But, if Nifty50 succeeds in getting past 10411 in the next couple of trading sessions then the hopes of new highs can arise. “As of now, it will be prudent on the part of traders to ride this rally only up to 10300 plus kind of levels. Hence, any dip in the early hours of next trading session owing to profit booking shall be considered as buying opportunity,” said Mohammad.
On the options front, maximum Put OI was seen at strike process 10,200 followed by 10,000 while maximum Call OI was seen at 10,500 followed by 10,400 strikes.
Fresh Put writing was seen at all the strikes from 10200 to 10000 while Call unwinding is seen in all the immediate strike as index managed to arrest its decline and witnessed a sharp recovery from lower levels.
India VIX fell down by 5.63 percent at 13.46 and decline in volatility towards the weekend suggests bulls are back in the market.
“The Nifty index opened positive and witnessed sustain buying interest till the end of session towards 10220 zones. It negated its formation of lower highs – lower lows and gave a reversal after seven trading sessions,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“If formed a Bullish candle which suggests a short term bottom process after the weakness of last couple of sessions. Now, if it manages to hold above 10178 then it may head towards 10250 then 10300 while on the downside supports are seen at 10120 then 10080 levels,” he said.
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