Technical View: Nifty forms bullish candle on weekly charts, keeps hope alive for next week

The bulls seem to be tired after crossing the 11,200-mark and carrying the Nifty to a four-month high, as the index remained under pressure on July 24. Weakness in global stocks and selling in all sectors, barring IT, weighed on sentiment but the rally in Reliance Industries limited losses.

The index settled a shade below 11,200 but formed a bullish candle on the daily charts as closing was higher than opening levels.

The Nifty also formed a bullish candle on the weekly scale as it gained 2.7 percent for the week, which raised hopes of the bulls kicking back in the coming sessions to take the index to 11,400, experts say.

Considering the sideways nature of the current phase, it will be prudent to remain neutral till a directional move emerges in the Nifty, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol..

After opening lower at 11,149.95, the Nifty50 hit an intraday low of 11,090.30. The index managed to go past its previous closing of 11,215.45, hitting an intraday high of 11,225.40 in the last hour of trade but couldn’t hold it. It ended at 11,194.20, down 21.30 points.

"Last three sessions of price behaviour are hinting that the Nifty may be chalking out a new trading range between 11,240 – 11,050, as the price range is fluctuating inside the Hanging Man kind of formation seen on July 22," Mohammad said.

Despite the Nifty’s flat moves move in the last three sessions, a decent bullish candle is visible on weekly charts which may keep the hopes of bulls alive.

If the Nifty registers a strong close below 11,000, then it should be considered as initial signs of weakness, he said. "In that scenario, the initial target on the downsides can be the test of 200-day moving average, whose value is placed around 10,860 but considering larger trends, a bigger target towards 10,560 can't be ruled out," Mohammad said.

An expansion on the upside will resume on a strong close above 11,250, with targets placed at around 11,400, he said.

The Bank Nifty traded lower after gap down opening at 22,853.20, and hit an intraday low of 22,417.20. The index closed sharply lower by 421.90 points or 1.83 percent at 22,662 and formed a bearish candle on the daily charts.

However, it gained 3.2 percent during the week to form a bullish candle on the weekly charts.

"Immediate support for the Bank Nifty is coming near 22,400-22,200 levels and resistance is placed at 22,800-23,000. If the index closes above 23,000, then we may see good move again," Rohit Singre, Senior Technical Analyst at LKP Securities, said.