Technical View: Nifty forms bullish candle, closes at 2019 high; 11,200 crucial for bulls
The Nifty50 started off the week on a strong note and closed at highest level of 2019 on Monday after the Election Commission announced Lok Sabha elections date, saying voting will take place during April 11-May 19 and counting on May 23.
The index rebounded sharply after two-day consolidation and closed above critical resistance 11,118 levels. It formed large bullish candle on the daily charts.
The smart rally indicated that momentum strengthened further, which may take the Nifty to new targets – 11,200 and then 11,409 levels, experts said, adding the selling pressure could be possible if the index breaks and closes below 11,049 levels.
The Nifty50 after opening higher at 11,068.75, gradually extended rally and touched an intraday high of 11,180.90 in late trade. The index closed 132.60 points or 1.20 percent higher at 11,168.
“Finally Nifty50 appears to have registered a decisive breakout above its three month old consolidation range, placed between 11,100–10,550 kinds of levels, as it opened the week on a positive note with a thumping bullish candle to sign off the session way above its critical resistance points,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
He said this breakout not only appears to have paved the the way for a sustainable rally but also opened up new targets for Nifty, based on consolidation range, which can be close to 11,550 levels.
Hence, traders shall continue to remain positive on the index as long as it sustains above the minor gap zone of 11,059-11,049 registered in Monday’s session and look for logical targets placed around 11,409 kinds of levels, he added.
According to Mazhar, short term trend can come under selling pressure only on a close below 11,049 levels and hence for all long positions a close below 11,049 shall be treated as a stop loss level.
India VIX fell by 0.30 percent to 14.89 levels. Volatility has been falling down from last seven trading sessions and lower volatility is providing the comfort to bulls zones to extend its momentum.
On Option front, maximum Put open interest (OI) is at 11,000 followed by 10,800 strike while maximum Call OI is at 11,500 followed by 11,400 strike.
Meaningful Put writing is at 11,100 followed by 11,000 strike while Call writing is at 11,400 strike.
Option band signifies a shift in higher trading range in between 10,985 to 11,300 zones, experts said.
“Nifty index has been making higher top – higher bottom formation and supports are gradually shifting higher with medium term support at 10,985 zones,” Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited said.
It formed a bullish candle on daily scale and needs to hold above 11,118 zones to extend its gains towards 11,200 then 11,250-11,333 zones, he added. “Support exists at 11,118 then 11,050 zones.”
Bank Nifty has been making higher lows from last seven consecutive sessions and headed towards 28,000 zone. It has recently surpassed its multiple hurdle of 27,750 zones and now looking for its life time high of 28,388 zone. The index closed at 27,968.60, up 206.80 points.
“Now it has to continue to hold above 27,750 zone to extend its momentum towards 28,388 zones while on the downside support exists at 27,750 then 27,500 zones,” Chandan said.