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Technical View: Nifty forms large bullish candle on weekly scale, traders can hold long positions

April 09
18:29 2020

The bulls made a strong comeback on April 9. The Nifty50 gained 4 percent and recouped all the intraday losses witnessed in the previous session. Hopes of an economic stimulus to alleviate the coronavirus pain and positive global cues amid expectations of plateauing of infections lifted sentiment.

The index closed above 9,100 for the first time since March 16 and formed a bullish candle on daily charts as closing was higher than the opening level.

The week was good for the index that saw nearly a 13 percent rally after a long period. As a result, the index registered a robust bullish candle on the weekly scale for the first time after the brutal correction seen in recent times.

Experts feel the momentum may continue in the near term and the next target for the Nifty could be around 9,400 if it holds 9,100.

Traders are advised to hold long positions, if any, with a stoploss below 8,900 levels and look for a initial target of 9,390.

The Nifty50 started off the day on a strong note at 8,973.05 and remained in an uptrend throughout session. The index hit an intraday high of 9,128.35 in late trade before closing at 9,111.90, up 363.15 points or 4.15 percent.

“Another key technical development in the near term can be the bullish crossover of the 5-day EMA (which was placed at 8,741) over its 13-day EMA (8,733), hinting at strengthening of the underlying short-term uptrend,” Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.

With higher top and higher bottom sequence in place from the lows of 7,511, the Nifty appeared to be depicting an ascending channel and a bigger targets towards 9,800 couldn’t be ruled out, he said.

If the index sustains above 9,131 levels, initial target can be 9,390, a 38 percent retracement of the fall from 12,430 levels. In the short term, it is critical that the index stays above 8,904, as a breach of this level can increase the selling pressure and drag the index towards critical support of 8,730, he added.

The volatility has cooled off significantly in the last couple of weeks. India VIX fell below 50 levels on April 9 from 86 in March, which has provided stability to the markets.

The Bank Nifty, too, witnessed a strong rally, rising 967.10 points, or 5.10 percent, to close at 19,913.60 and formed a bullish candle on daily charts.

For the week, the index gained 15.44 percent and witnessed a large bullish candle on the weekly scale.

“We expect a catch-up rally for the Bank Nifty and the overall underperformance is likely to get reduced. We continue with target zone of 21,450-22,000 on the upside which is almost ten percent move from current levels,” Manav Chopra, CMT, Head Research – Equity at Indiabulls Securities told Moneycontrol.

He expects the index to gain further momentum on the upside going ahead. “Near term, support is placed at 18,500 zone on the downside,” he said.

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