Mazhar Mohammad said for time being, traders are advised to maintain a stop below 11,000 on closing basis for their long positions in index.
Nifty50 gained sharply from the word go, extending the previous day's rally for the second consecutive session on August 9. There was a bit of profit booking in the last hour of trade, that came as a caution ahead of the June factory data, scheduled for later in the day and the coming truncated week.
The index still managed to close above the 11,100 level and formed a small bullish candle resembling a Shooting Star kind of pattern on the daily charts. It gained more than 250 points in two straight sessions, taking total weekly gains to over a percent which helped it form a bullish candle on the weekly scale.
A 'Shooting Star' pattern is formed when the index comes under selling pressure as traders start booking profits at higher levels. This pattern is usually formed in an uptrend and is treated as a reversal pattern, but it would require confirmation before we can conclude that the trend will get reversed in the near future.
Experts feel technically 11,062 would be an important level to watch out for to retain upside momentum in the coming session.
The Nifty50 opened higher at 11,087.90 and extended its rally to hit an intraday high of 11,181.45 in afternoon trade. It maintained positive momentum throughout session, though it saw some profit booking in last hour of trade, and closed 77.20 points higher at 11,109.70.
"Nifty50 appears to have undergone intraday profit booking, after witnessing a strong gap up opening, as it tested its 200-day SMA (11,166) with a high of 11,181 which resulted in the Shooting Star kind of formation whereas weekly charts registered a decent bullish candle. However, this profit booking can be attributed to a truncated week ahead," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said in the next trading session to retain positive bias the said index needs to sustain above 11,062 level. A breach of this shall enhance selling pressure on intraday basis, whereas more weakness in this regard will get confirmed on a close below 11,018 kind of levels.
Contrary to this, strength shall resume on a close above 11,150 level, which will confirm a fresh breakout on lower time frame charts. This will open up bigger targets closer to 11,500 level, he noted.
Mohammad continued that in between, the index could face significant resistance around 11,270 levels. For the time being, he advised traders to maintain a stop below 11,000 on closing basis for their long positions in index.
The market will remain shut on Monday, August 12 for Bakri Id.
India VIX fell marginally by 1.52 percent to 15.84 level.
On the Options front, maximum Put Open Interest is at 11,000 followed by 10,800 strike while maximum Call Open Interest is at 11,500 followed by 11,000 strike.
Minor Call Writing is at 11,500 followed by 11,300 strike, while Put Writing is at 11,100 followed by 10,800 strikes. Option data suggests that the Nifty could trade in a range of 10,800 to 11,300 levels in the coming sessions.
Bank Nifty opened positive and witnessed buying interest towards the 28,600 level. It managed to hold above the 28,250 zone and closed 321.45 points higher at 28,431.90.
"The index formed a bullish candle on the daily as well as weekly chart. It has to hold above the 28,000 level to witness an upmove towards 28,550 then 28,750 levels while on the downside supports are seen at 28,000 then 27,750 levels," said Chandan Taparia, Associate Vice President, Analyst-Derivatives at Motilal Oswal Financial Services said.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.
