Technical View: Nifty forms Doji candle; 11,871 crucial for bulls on June 11
On a volatile day for Indian markets, Nifty managed to float above 11,900 and made a Doji candle on the daily charts for the second consecutive day in a row.
A Doji is formed when the opening and the closing level is virtually the same but there is wide movement on either side throughout the trading session. It generally signals indecisiveness among the bulls and bears.
Nifty, which opened at 11,934, rose to an intraday high of 11,975 before slipping below 11900. It hit an intraday low of 11,871 before closing at 11,922, up 52 points from its previous close of 11,870 on June 7.
Most experts feel that the index is moving in a narrow range and awaiting a breakout or a breakdown before traders could initiate the next course of action. The crucial level on the downside to watch is 11,871 while on the upside 12,103 will continue to be a crucial hurdle.
“Albeit Nifty made a pullback attempt and closed in positive terrain it registered a Doji kind of indecisive formation after retracing 62 percent of its fall from the highs of 12,103–11,769,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Hence, in the next trading session, if the said index slips below 11,871 then it will attract more selling pressure on intraday basis whereas a close below 11,840 will resume the downswing thereby threatening the recent low of 11,769, which will be eventually broken down to meet its logical targets of 11600 levels,” he said.
Mohammad further added that contrary to this, a strong close above 12,040 will breathe some life into bulls. Traders can look to create short positions either on breach of 11,840 on a closing basis or on a pullback in the zone of 11,950–970 with a stop above 12,039.
Bank Nifty, which opened on a positive note, failed to hold on to momentum and formed a bearish candle on the daily scale. Experts suggest that the index has to now cross and hold above 31,150 to witness an up move towards 31,500, then 31,750.
India VIX moved up 0.77 percent to 14.97. Volatility is hovering below 16, which is supportive for buying interest on any declines.
On the options front, maximum Put OI was placed at 11,500 followed by 11,000 while maximum Call OI was placed at 12,500 followed by 12,000.
Minor Put writing was seen at 11,900 followed by 11,800 while minor Call writing was seen at 11,900 followed by 12,300. Options data suggests a wider trading range of 11,750-12,250.
“The Nifty index continued its consolidation in a trading range of 100 points for the most part of the session and closed near its opening levels. It has been forming multiple Doji candles on a daily scale which indicates tug of war between bulls and bears to hold 11,888,” Chandan Taparia, derivative & technical analyst at Motilal Oswal Securities told Moneycontrol.
“It has to get the follow up buying with a hold above 11,888 to get some stability and a move towards 12,000-12,041, while on the downside support is seen at 11,761. then 11,660,” he said.