Tech view: Nifty50 forms ‘Bullish Harami’, signals possible trend reversal ahead
NEW DELHI: After falling below key support area in the previous session, the Nifty50 on Thursday rebounded and closed above its opening level after failing to do so for the seventh consecutive session in a row.
The index settled exactly at its five-day simple moving average of 8,778 and formed a pattern similar to a ‘Bullish Harami’ formation, suggesting that the bearish trend may reverse and it may be good time to add long positions.
A Bullish Harami is a two-candlestick chart pattern, in which a large candlestick is followed by a small candlestick. The body of the smaller candlestick is located within the vertical range of the larger body. (See chart).
The index will now see the immediate resistance at around 8,827, while support may come around the 8,700 level.
“The Nifty50 formed a Harami pattern on the daily chart as it traded inside the trading range of last session, which means it negated the immediate effect of selling pressure. However it has multiple hurdles near the 8,820 level and the bulls will get comfort only above this level. Overall, the index has been consolidating in the 8,720-8,820 range and requires a decisive range breakout to start the fresh leg of rally,” said Chandan Taparia, Associate Vice President at Motilal Oswal Securities.
The Nifty50 opened the day at 8,739, which was 14.30 points higher than its previous close of 8,724. It then fell to the day’s low of 8,719, before rebounding to hit a high of 8,783. The index eventually closed the day at 8,778, up 53.30 points, or 0.61 per cent.
Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory at Chartviewindia.in, believes for further strength, the bulls would need to take off the immediate resistance placed around 8,827 level.
“A close beyond that level may mean the next targets will be close to the 8,900 level. We recommend traders to maintain a positive bias,” Mohammad said.
The index settled exactly at its five-day simple moving average of 8,778 and formed a pattern similar to a ‘Bullish Harami’ formation, suggesting that the bearish trend may reverse and it may be good time to add long positions.
A Bullish Harami is a two-candlestick chart pattern, in which a large candlestick is followed by a small candlestick. The body of the smaller candlestick is located within the vertical range of the larger body. (See chart).
The index will now see the immediate resistance at around 8,827, while support may come around the 8,700 level.
“The Nifty50 formed a Harami pattern on the daily chart as it traded inside the trading range of last session, which means it negated the immediate effect of selling pressure. However it has multiple hurdles near the 8,820 level and the bulls will get comfort only above this level. Overall, the index has been consolidating in the 8,720-8,820 range and requires a decisive range breakout to start the fresh leg of rally,” said Chandan Taparia, Associate Vice President at Motilal Oswal Securities.
The Nifty50 opened the day at 8,739, which was 14.30 points higher than its previous close of 8,724. It then fell to the day’s low of 8,719, before rebounding to hit a high of 8,783. The index eventually closed the day at 8,778, up 53.30 points, or 0.61 per cent.
Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory at Chartviewindia.in, believes for further strength, the bulls would need to take off the immediate resistance placed around 8,827 level.
“A close beyond that level may mean the next targets will be close to the 8,900 level. We recommend traders to maintain a positive bias,” Mohammad said.
