Technical View: Nifty jumps 9% to form Long White Day candle, 9,000 crucial resistance
The Nifty50 saw biggest-ever single-day gains in absolute terms on April 7 after two weeks of consolidation. The hope that new infections and deaths each day in Europe and New York could be started declining boosted global sentiment, and as a result there was a rally across sectors, which gained in the range of 6-10.5 percent.
The index posted biggest single-day gains in percentage terms since May 2009 and formed Long White Day candle on daily charts as the closing was much higher than opening levels.
Experts expect the sentiment to take the index towards 9,000, which could act as a crucial resistance in the near term. Traders are advised to create long positions in the index.
After opening sharply higher at 8,446.30, the Nifty extended gains as the day progressed and touched an intraday high of 8,819.40. The index closed 708.40 points, or 8.76 percent higher, at 8,792.20, while the Sensex climbed above 30,000 levels for the first time since March 17.
“The Nifty50 appears to have resumed its upmove as it has registered a Long White Day kind of formation. In this process it registered a breakout above its Inverted Head & Shouders formation on the daily Line Chart, which has opened up bigger targets towards 9,500 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in, told Moneycontrol.
If the index sustains above 8,360, then it should remain positive and can initially head towards 9,038, he said. “Once it manages a decisive close above the said hurdle then a bare minimum target of 9,390 can’t be ruled out which is 38 percent Fibonacci retracement level of the fall from 12,430–7,511.”
On the downsides initial support shall be expected around 8,650, where traders are advised to create long positions in the index and look for bigger targets, he said. This positive outlook, however, shall get negated with a close below 8,360, he said.
The volatility also cooled off further as India VIX dropped to around 52 levels, from 55.30. The falling VIX may provide some stability to the market, experts feel.
The Nifty Bank also traded strong throughout session with closing 10.5 percent higher at 19,062.50 and formed a bullish candle on daily charts after consistent red candles in previous five consecutive sessions.
“Immediate support for the index is coming near 18,500-18,000 levels, while resistance is coming near 19,450-19,700 levels,” Rohit Singre, Senior Technical Analyst at LKP Securities said.
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