Investors are advised to stay long on the index with a strict stop loss below 10,300 levels on closing basis. The March series started with a strong upmove and hopefully, it should take Nifty50 towards 11000 levels in near future.
The Nifty50 which started on a positive note managed to build further momentum towards the closing of the trade and closed its crucial 100-days exponential moving average placed around 10,418 making a strong bullish candle on the daily charts.
However, on a weekly basis, Nifty made a Dragonfly Doji kind of pattern which suggests that a reversal in the trend could be in the offing.
A Dragonfly Doji pattern signals indecision among traders but it also points to the fact that bulls managed to bring the index towards the opening level. The index has to sustain above 10,400 for the bullish sentiment to continue.
Investors are advised to stay long on the index with a strict stop loss below 10,300 levels on closing basis. The March series started with a strong upmove and hopefully, it should take Nifty50 towards 11,000 levels in near future.
The Nifty50 which opened at 10,408 rose to an intraday high of 10,499. It slipped marginally below 10,400 to hit its intraday low of 10,396 before closing 108 points higher at 10,491.
“Finally, a much-awaited pullback rally materialised on the last trading session of the week with a robust up move which resulted in a Dragon Fly Doji kind of reversal formation on the weekly charts,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Interestingly, the strength of this up move with broad-based participation as suggested by advance-decline ratio accompanied with a decisive close above its 100-day EMA is pointing towards more upsides which can get extended initially up to 10600 kinds of levels, he said.
Mohammad is of the view that the real test for bulls lies in clearing the hurdle of its 50 days EMA, whose value is placed around 10,559 levels, which offered resistance twice on a pullback attempt from the lows of 10276 levels. “A close above the said average can be an initial sign of strength towards trend reversal in favor of bulls,” he said.
India VIX fell down by 4.25 percent at 14.20. VIX has declined by more than 13 percent in this week which has given a short-term stability to the market.
On the options front, Maximum Put open interest was seen at 10,000 followed by 10,400 strikes while maximum Call open interest was seen at 10700 followed by 10,500 and 11,000 strikes.
“Fresh Call and Put activities was seen in most of the near the money strikes and option band signifies a broader trading band between 10,300 to 10,650 zones,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“Nifty index formed a Bullish candle on the daily scale and a Dragonfly Doji on the weekly scale which indicates that bulls are back in the market after the decline of last three weeks,” he said.
Taparia further added that Nifty has to continue to hold above 10,430 zones to extend its move towards 10,550 then 10620 mark which is 38.2 percent retracement of the entire down leg from 11,171 to 10,276. While on the downside supports are seen at 10,400 then 10,333 levels.
