Technical View: Nifty forms a small bodied candle; next target seen at 10,400

The Nifty50 which came within a kissing distance from hitting a record high on Tuesday closed below its opening level, thus making a small-bodied candle on the daily candlestick charts.

The index which opened with a slight gap on the upside rose to a high of 10,237 which was just 14 points short of hitting a fresh record high of 10,251.85. It slipped in morning trade to hit its intraday low of 10,182.40.

The index which opened at 10,218.55 failed to keep the momentum going and closed just above its psychological support level of 10,207.70. It made a small-bodied candle which looked like a ‘Doji’ type of pattern but has a small body.

“Nifty index opened positive and managed to close above 10,200 zone. However, it formed a small-bodied candle but closed with the gains of 23 points and supports are slightly shifting higher,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“It has been consolidating in between 10,120 to 10,250 zones from last seven trading sessions and requires a decisive range breakout to commence the next leg of the rally,” he said.

Taparia further added that the index has to continue to hold above 10,178 to witness an up move towards 10,250-10,280 zones while supports are seen at 10,178 then 10,120 zones.

On the options front, maximum Put OI was seen at 10,000 followed by 10,100 while maximum Call OI is shifted to 10,300 followed by 10,200 strikes.

Fresh Put writing was seen at 10,200 and 10,300 strikes while fresh Call writing is happening at all the strikes from 10,250 to 10,350.

Option data suggested a hold above 10,120-10,150 zones while upside would be restricted to 10,280-10,300 zones for next few sessions, experts feel.

India VIX fell down by 5.93 percent at 11.59 and falling volatility is giving comfort to bulls and suggests that decline is being bought in the market.

“Nifty50 appear to have registered one more indecisive formation which resembles a Doji Cross suggesting caution on the part of market participants at higher levels as traders almost signed off the day where they started,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

Interestingly, Nifty50 is trading at the higher end of the range whereas Bank Nifty is finding support at the lower end of its trading range around 24,000 levels.

“Any contribution from this index may give a much needed fillip to the bulls to absorb the supplies emanating from around 10,250 level only to scale new highs once again,” he said.

Mohammad further added that in that scenario bulls may march towards critical resistance zone of 10,400 –10,600 levels.

Traders are advised to keenly watch 10,100 level as a breach of this point on closing basis shall ideally resume short-term downtrend,” he said.