Significant Put writing was seen at 10500 and 10400 strikes which is shifting its support to higher side while intact Call writing at 10500 strikes is restricting its upside momentum.
The Nifty50 which reclaimed 10,500 in intraday trade failed to hold the momentum and closed 20 points short making a ‘Doji’ type of candlestick pattern on the daily candlestick charts and a bullish candle on the weekly charts.
The index has managed to climb all wall of worries in this past week and as long as 10,350 remains intact, traders are advised to stay with long positions. The next possible target on the Nifty is placed above 10,600 levels, suggest experts.
A 'Doji' is formed when the index opens and then closes approximately around the same level but remain volatile throughout the day which is indicated by its long shadow on either side. It appears like a cross or a plus sign.
The Nifty50 which opened at 10,495 rose to an intraday high of 10,519. It slipped to an intraday low of 10,451 before closing the day at 10,480, up 21.95 points.
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“The bulls appear to have remained clueless over the weekend as they have chosen to sign off the last session of the week with an indecisive formation called Doji but registered a strong bullish candle for third consecutive week (on weekly charts),” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Despite remaining volatile and trading with negative breadth for the last three sessions, the positive key takeaway can be the fact that intraday dips post breakout sessions were bought into suggesting that the ongoing uptrend is likely to last for some more time with decent appreciation going forward,” he said.
Mohammad further added that as long as market sustains above 10,350 levels one should look for initial targets placed around 10,630 and once this level is decisively conquered bigger targets can’t be ruled out.
However, the negative advance-decline ratio for the third session in a row accompanied with sell signal on twin momentum oscillators and the fact that market registered a positive close for 7th day in a row can be a cause for concern and may be pointing towards a correction or temporary pause of the ongoing upmove, suggest experts.
India VIX fell down by 2.88 percent at 14.14. VIX has to cool down to extend its positive momentum. On the options front, maximum Put OI is placed at 10300 followed by 10200 strikes while maximum Call OI is placed at 10500 followed by 10700 strikes.
Significant Put writing was seen at 10500 and 10400 strikes which is shifting its support to higher side while intact Call writing at 10500 strikes is restricting its upside momentum.
“We have seen significant Call writing at 10700 which is going to be a next resistance zone if it Call unwinding happens at 10500 strikes. Option band suggests an immediate trading range in between 10400 to 10600 zones,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“Nifty index formed a Spinning Top candle on the daily scale which means that bulls are not loosening their grip but bears are putting pressure at higher levels. It has been making higher highs from last ten consecutive trading sessions and now if it negates this formation, then only a pause in positive momentum could be seen,” he said.
Taparia further added that Nifty closed the week at a crucial 10,480 zones and a decisive hold above 10,450 is required to extend its up move towards 10,525 then 10,550 while on the downside supports are seen at 10,420 then 10,380 levels.