Technical View: Nifty forms Doji pattern for third day, 13,690 crucial for upside

The Nifty50 closed a rangebound session on a positive note on December 14, backed by positive global cues and improved industrial output data for October.

The index formed Doji pattern for the third day in a row on the daily chart as closing was near opening levels. A Doji candle indicates there indecisiveness among the bulls and the bears and bounces being sold in the absence of follow-up buying interest.

Experts say the consolidation is likely to continue in the coming sessions unless the index decisively breaks 13,690 levels.

For the time, traders should remain neutral on the index and focus on stock-specific opportunities, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

The Nifty50 opened higher at 13,571.45 and hit a record high of 13,597.50 in the early trade but gradually slipped into the red to hit the day's low of 13,472.45. It recouped the losses in the last couple of hours to end at a record closing high of 13,558.20, up 44.30 points.

"Albeit Nifty50 appears to be slowly nudging in the northward direction, its momentum appears to be dwindling as the index signed off the session with a Doji kind of formation for the third day in a row," Mohammad said.

The price behaviour of the last 14 trading sessions reveals that the Nifty chalked out an ascending channel with a narrow trading range. For the last five days, the bulls are working hard, rather struggling, to get past the upper boundary of the channel, whose resistance point for the next session is placed at around 13,690, he said.

If the bulls manage a close above the said channel, then, based on channel breakout, a new target of 13,950-14,000 can be projected, he added.

Similarly, on the downside, 13,400 looks like a critical short-term support as a breach of this on a closing basis can bring the bears back into the game, he said.

India VIX rose by 3.26 percent from 18.79 to 19.40 but was still below 20 levels.

On the options front, maximum Put open interest was at 13,000 followed by 13,200 strike while maximum Call open interest was at 13,000 followed by 13,500 strike. Marginal Call writing was seen at 13,600 then 13,900 strike while Put writing was seen at 13,200 then 13,500 strike.

The options data suggests an immediate trading range of 13,200-13,750 for the Nifty.

The Bank Nifty opened marginally higher at 30,735.15 and extended gains to hit an intraday high of 30,845.80 in the initial hour of the session. It traded in a narrow range of 200 points for most of the session but closed in the green at 30,745.90, up 141.05 points.

The index formed a small-bodied candle on the daily scale as buying was visible at lower zones but hurdle was intact at higher levels, said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

The index has to hold above 30,500 for an upmove towards 31,000 then 31,200, while on the downside, supports are seen at 30,200 then 30,000 levels, he added.