Technical View: Nifty forms bullish candle on weekly scale, next resistance seen at 11,141
The Nifty gained strength in the last hour of trade and closed on a strong note on September 13, driven by hope of more steps from the government to boost growth. The European Central Bank (ECB) stimulus and easing of US-China trade tensions also lifted sentiment.
The index recouped its previous day’s losses to close above 11,050 and formed a bullish candle on daily as well as weekly charts, indicating strength in the market.
If the index gains further and gives strong breakout above 11,141 levels, the next resistance, then it can make a way towards crucial 11,300 levels, experts say.
After opening flat at 10,986.80, the Nifty remained volatile to hit the day’s low of 10,945.75. But it gained strength in the last hour and touched an intraday high of 11,084.45. The index closed 93.10 points higher at 11,075.90 and for the week, it gained 1.18 percent.
“It was heartening to see the Nifty50 recouping all the losses registered on September 12, thereby negating the impact of bearish formations before signing off the session with a strong bullish candle on both daily as well as weekly charts,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
He, however, said the pattern after the recent corrective swing low of 10,637 was still unfolding in the form of a contracting triangle, which had the potential to register a breakdown.
“Hence, to negate the formation of this pattern, the Nifty needs a strong breakout above 11,141 levels,” he added.
“On such a breakout, the possibility of 10,637 holding on to its ground firmly remains much higher. Moreover, such a breakout will also facilitate a decent pull-back rally with higher targets placed around 11,450 levels, whereas on the downside, 10,945 shall be considered as critical support in the near term and as long as the Nifty holds on to this support, positive bias shall be retained in the market.”
He advised traders to wait for a breakout above 11,141 levels before initiating long positions.
The Bank Nifty, too, bounced back from the lows and closed 1 percent higher at 28,098.75 and gained 3 percent for the week.
“We have been eyeing 28,500 zone on the upside and we continue to maintain our bullish stance on the Nifty Bank,” Amit Shah, Technical Research Analyst at Indiabulls Ventures, said.
In the near term, 27,600 is the support zone and traders should continue to have a long bias, he added. A breach of 28,500 on a sustainable basis would have bullish implications, Shah said.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.