Technical View: Nifty forms Hammer pattern; pullback possible in next few sessions

July 09
17:29 2019

Nifty50 after a roller coaster ride throughout session closed flat on July 9 and formed a ‘Hammer’ pattern on daily charts. After pricing in tax proposals announced in Budget, the market shifted its focus to June quarter earnings season that will be kicked off by IT major TCS later today.

The index after opening lower at 11,531.60 hit an intraday low of 11,461 on weak global cues, but recovered morning losses and hit a day’s high of 11,582.55 in the afternoon. Overall it was a consolidation day for the market after a sharp fall seen in the previous two consecutive sessions. The index closed 2.70 points lower at 11,555.90.

The formation of a bullish Hammer on the daily chart indicated some buying interest near 11,480-11,500, experts said, adding the index could see some pullback in the coming session.

Hammer is a bullish reversal pattern formed after a decline. A Hammer consists of no upper shadow, a small body, and long lower shadow. The long lower shadow of the Hammer signifies that it tested its support where demand was located and then bounced back.

“In case a sustainable pullback materialises then Nifty should ideally head to test its 50-day exponential moving average whose value is placed around 11,714 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

Contrary to this, a breach of 11,460 shall negate the optimistic outlook and can initially drag down the index towards 11,426, Mazhar Mohammad added.

India VIX fell 1.17 percent to 13.68.

For Nifty options, maximum Put OI was at 11,300 followed by 11,500 strike while maximum Call OI was at 12,000 followed by 11,900 strike.

Put writing was seen at 11,200 then 11,300 strike while Call writing was seen at 11,600 followed by 11,900 strike.

Experts feel Option data suggests a lower trading range of 11,400-11,800.

Bank Nifty

Bank Nifty opened negative but traded in a range of 300 points for the entire trading session. The index closed 34.70 points lower at 30,569.15.

The index formed a Doji candle after the sharp decline of three trading sessions indicating some pause in selling pressure. It needs to surpass an immediate hurdle zone to get short term stability, experts feel.

“Now till it remains below 31,000 it can continue its weakness towards next major support of 30,250 while on the upside, the hurdle is seen at 30,850 then 31,000,” Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

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