Technical View: Nifty forms bullish candle, immediate trading range at 11,550-11,800

April 10
02:28 2019

The recovery in later part of session helped Nifty50 close higher amid volatility on April 9 and formed bullish candle on daily charts. Positive global cues and the buying across sectors boosted trader sentiment.

But the advance decline ratio skewed in favour of bears pointing towards selling pressure in the broader market as more number of scrips closed in negative terrain. About 966 shares declined against 786 advancing shares on the NSE. The Nifty Midcap and Smallcap indices closed flat with a positive bias.

Major upside in the market is possible only if Nifty decisively closes above its record high of 11,761 which it touched last week, experts said.

Nifty50 after opening flat at 11,612.05 turned volatile and hit an intraday low of 11,569.70, but gained momentum in later part of the session and touched a day’s high of 11,683.90. The index closed 67.50 points higher at 11,672.

“Bulls appears to be putting up a tough fight around 11,550 levels as index bounced back at least on three occasions in the last 5 sessions from around the said levels. In Tuesday’s session, Nifty registered a bullish candle,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

He said, besides, daily MACD indicator also generated a sell signal in last session pointing towards fading momentum on the upside.

While selling pressure may not get accelerated unless Nifty breaches 11,549 levels, upside also looks limited and capped unless bulls manage a decisive close above 11,760 levels, he added.

Hence, Mazhar Mohammad advises traders to remain neutral on long side for time being whereas shorting opportunity shall arise on a close below 11,550 levels.

On the Options front, maximum Put open interest (OI) is at 11,500 followed by 11,600 strike while maximum Call OI is at 12,000 followed by 11,800 strike.

Options band signifies an immediate trading range of 11,550 to 11,800 zones, experts said, adding sudden spike in VIX indicates limited upside with volatile swing in the market.

India VIX moved by 0.65 percent to 20.28 levels.

“Index has been consolidating between 11,550 and 11,750 zone for last eight trading sessions and requires a decisive range breakout to commence the next leg of rally,” Chandan Taparia, Associate Vice President | Analyst-Derivatives, Motilal Oswal Financial Services said.

Now it has to continue to hold immediate support of 11,550–11,580 zones to retest the life-time high of 11,761 and then fresh move towards 11,888 zone while on the downside support is intact at 11,550 zone, he added.

Bank Nifty formed a Harami pattern and has been consolidating between 29,700 to 30,250 zones from last four trading sessions. The index closed at 30,113.85, up 268.55 points.

“Now it has to cross and hold above 30,250 zone to witness an up move towards 30,500 then 30,650 zones while on the downside major support is seen at 29,700 zone,” Chandan Taparia said.

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