Tech View: Nifty50 forms 'Hammer' pattern; buying interest missing at higher levels
NEW DELHI: Nifty50 formed a ‘Bearish’ candle on Wednesday but the intraday fall was mostly bought into.
While the index breached its five-day exponential moving average (EMA) and made a new swing low of 9,161.80, it respected its 13-day EMA to settle above the 9,200-mark.
“The index formed a ‘Bearish’ candle. The decline was bought into. But the buying interest was missing at higher levels. The index closed in the negative, but respected its 13-DEMA and a rising support trend line on the daily chart,” said Chandan Taparia, derivative & technical analyst at Motilal Oswal Securities.
Analysts noted that the index was in a corrective phase since the recent high of 9,274 and the Wednesday’s chart seemed like the top of the bottom.
“Nifty50 maintained its tempo as it witnessed decent recovery from intraday lows of 9,161 levels. It made ‘Hammer’ pattern on the chart. However, a follow up buying in immediate trading session shall confirm the reversal from 9,161 levels from where Nifty50 can once again embark on a short term uptrend, with the initial objective of re-testing its life time highs of 9,274,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.
Mohammad believes that once the level is conquered on a closing basis, a rally towards 9,350-9,400 level is very much likely.
“However, Wednesday’s price action, especially after strong bull candle on a relatively higher volumes witnessed is certainly a disappointing factor, suggesting that the market is still in a vulnerable zone. Hence, traders need to have strict stop loss below 9,179 levels on closing basis and the trigger of this stop shall resume the short term downtrend,” the expert said.
Taparia said that the index now needs to sustain above 9,191, failing to which can open doors for a selling spree towards 9,133 and 9,090. Levels around 9,250 and 9,280 may prove short term resistance levels, he said.
While the index breached its five-day exponential moving average (EMA) and made a new swing low of 9,161.80, it respected its 13-day EMA to settle above the 9,200-mark.
“The index formed a ‘Bearish’ candle. The decline was bought into. But the buying interest was missing at higher levels. The index closed in the negative, but respected its 13-DEMA and a rising support trend line on the daily chart,” said Chandan Taparia, derivative & technical analyst at Motilal Oswal Securities.
Analysts noted that the index was in a corrective phase since the recent high of 9,274 and the Wednesday’s chart seemed like the top of the bottom.
“Nifty50 maintained its tempo as it witnessed decent recovery from intraday lows of 9,161 levels. It made ‘Hammer’ pattern on the chart. However, a follow up buying in immediate trading session shall confirm the reversal from 9,161 levels from where Nifty50 can once again embark on a short term uptrend, with the initial objective of re-testing its life time highs of 9,274,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.
Mohammad believes that once the level is conquered on a closing basis, a rally towards 9,350-9,400 level is very much likely.
“However, Wednesday’s price action, especially after strong bull candle on a relatively higher volumes witnessed is certainly a disappointing factor, suggesting that the market is still in a vulnerable zone. Hence, traders need to have strict stop loss below 9,179 levels on closing basis and the trigger of this stop shall resume the short term downtrend,” the expert said.
Taparia said that the index now needs to sustain above 9,191, failing to which can open doors for a selling spree towards 9,133 and 9,090. Levels around 9,250 and 9,280 may prove short term resistance levels, he said.
