Tech view: Nifty50 reclaims 8,900, forms bullish candle; rally may extend to 9,000


NEW DELHI: Rising for a fourth straight session, the Nifty50 on Tuesday hit the 8,900 mark on a closing basis — first time since September 2016 — to form ‘Bullish’ candle on the daily chart.

The index continued to make higher top higher bottom formation and respected its major support trend line by connecting the bottoms of 7,893 and 8,327. The MACD line on the chart still trades at par with the signal line, but it needs to breach the latter before sending a buy signal.

Overall, the index faces the immediate resistance at around the 8,970 level, while a breach below 8,850 would be seen as negative a signal.

The Nifty50 opened the day higher at 8,890.75. But the index slipped into the negative terrain and for most part of the session traded in the red, till it hit a low of 8,890.75. It pulled off a smart recovery towards the end to eventually close the day at 8,907.85, up 0.32 per cent. This was the second day when the index formed a green candle (See chart) on daily chart, suggesting the index closed above its opening level.

“It formed a Bullish candle on daily chart and supports are shifting higher to 8,850. Now till it holds above 8,850 region, the rally may extend towards 8,968 and 9,000. On the downside, multiple supports are seen near 8,820. Index is up by 3.5 per cent in the ongoing F&O series and is trading higher to its monthly VWAP of 8,755 mark which is also giving the upper hand to bulls,” Chandan Taparia Associate Vice President at Motilal Oswal Securities.

Sameet Chavan, Chief Analyst, Technical & Derivatives at Angel Broking advises traders to trade with a positive bias and keep holding directional long positions on the index by trailing a stop loss at 8,790 on a closing basis.

“Some of the index heavyweights have shown signs of strength and thus, we would continue with our optimistic stance to conclude the current derivatives expiry on a high note,” Chavan said.

Some experts are not that positive though.

Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at said that even as the short-term trend are positively-biased, this rally may not last long as technical picture on some weekly indicators is suggesting exhaustion of the upmove.

“We recommend traders to ride it cautiously with a stop below 8,779 on a closing basis. Immediate upside targets appear to be in the zone of 8,935 – 8,970. Once this critical hurdle is cleared market may witness euphoric phase on the upside,” Mohammad said.