Tech view: Nifty forms small-bodied black candle; traders advise caution
, ETMarkets.com|
Updated: Nov 02, 2017, 04.57 PM IST
A day after crossing the 10,400 level for the first time ever, the 50-share Nifty50 index closed in the red on Thursday. In the process, the index formed a small-bodied black candle on the daily chart.
A black candle occurs on the chart when the closing level of the day is lower than the opening level.
However, before closing 0.16 per cent down at 10,423, the Nifty50 hit a fresh record high of 10,453 in intraday trade.
Market experts say the index has been forming higher highs and higher lows and as long as it doesn’t negate this formation, it is likely to hold its strength.
Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory, Chartviewindia.in, said it was a day of consolidation, as the Nifty50 moved in a narrow range of around 40 points.
“Lack of follow through to Wednesday’s breakout is certainly a cause of concern, as the market is trading inside the critical resistance zone between 10,400 and 10,600 levels. Although, there is no visible technical weakness as of now, traders are still advised to remain cautious and maintain a bullish stance with a tight stop loss below 10,367 on a closing basis. If the 10,450 level is cleared on the upside, then this rally shall ideally get extended up to the 10,600 level.”
On the options front, maximum Put open interest stood at 10,000, followed by 10,200, while maximum Call OI was at 10,500 followed by 10,400. Fresh Put writing was seen at strike prices 10,200, 10,300 and 10,400 while fresh Call writing is seen at 10,600.
Options data suggests immediate support could attract buying interest but it requires unwinding at strike price 10,500 to witness a fresh bounce, said Chandan Taparia, Derivatives & Technical Analyst, Motilal Oswal.
Data suggests the immediate support for the index could attract buying interest but it requires unwinding at strike price 10,500 for the Nifty50 to witness a fresh bounce.
The Sensex closed the day 27 points down at 33,573.
Milan Vaishnav, Technical Analyst, Gemstone Equity Research & Advisory Services, said going into session tomorrow, the market breadth should continue to be a niggling technical worry. The current high of the market faces resistance at the 19-month long upward rising trend line, which is something we cannot ignore.
Traders should remain extremely vigilant at higher levels and continue to use any bounce more for protecting profits at higher levels, he said.
A black candle occurs on the chart when the closing level of the day is lower than the opening level.
However, before closing 0.16 per cent down at 10,423, the Nifty50 hit a fresh record high of 10,453 in intraday trade.
Market experts say the index has been forming higher highs and higher lows and as long as it doesn’t negate this formation, it is likely to hold its strength.
Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory, Chartviewindia.in, said it was a day of consolidation, as the Nifty50 moved in a narrow range of around 40 points.
“Lack of follow through to Wednesday’s breakout is certainly a cause of concern, as the market is trading inside the critical resistance zone between 10,400 and 10,600 levels. Although, there is no visible technical weakness as of now, traders are still advised to remain cautious and maintain a bullish stance with a tight stop loss below 10,367 on a closing basis. If the 10,450 level is cleared on the upside, then this rally shall ideally get extended up to the 10,600 level.”
On the options front, maximum Put open interest stood at 10,000, followed by 10,200, while maximum Call OI was at 10,500 followed by 10,400. Fresh Put writing was seen at strike prices 10,200, 10,300 and 10,400 while fresh Call writing is seen at 10,600.
Options data suggests immediate support could attract buying interest but it requires unwinding at strike price 10,500 to witness a fresh bounce, said Chandan Taparia, Derivatives & Technical Analyst, Motilal Oswal.
Data suggests the immediate support for the index could attract buying interest but it requires unwinding at strike price 10,500 for the Nifty50 to witness a fresh bounce.
The Sensex closed the day 27 points down at 33,573.
Milan Vaishnav, Technical Analyst, Gemstone Equity Research & Advisory Services, said going into session tomorrow, the market breadth should continue to be a niggling technical worry. The current high of the market faces resistance at the 19-month long upward rising trend line, which is something we cannot ignore.
Traders should remain extremely vigilant at higher levels and continue to use any bounce more for protecting profits at higher levels, he said.
