New Delhi: Nifty50 on Tuesday formed an ‘Inverted Hammer’ candle on the daily chart, which at many a time is formed around bottoms, as traders remain sceptical about the initial pullback attempts, said analysts. Analysts added that the level of 15,600-700 remains a strong support for the index going ahead. They see resistance at 16,850 level.
Ruchit Jain, Lead Research at
5paisa.com said that the momentum readings on the lower time chart have entered oversold territory.
Usually the index either witnesses a pullback move or a consolidation for 1-2 sessions in such oversold set-ups, before resuming the momentum in direction of the trend.
“Tuesday’s move has led to formation of an ‘Inverted Hammer’ candlestick pattern near the previous swing low support. This pattern, along with the oversold setups can lead to a pullback move in one to two sessions,” Jain said.
“However, a confirmation for such pullback will be seen only on crossover above the candle’s high of 15,858. In such a case, the pullback could extend towards the retracement resistance and the recent gap zone of 15,925 and 16,100,” he added.
Milan Vaishnav, Founder & Technical Analyst at Gemstone Equity Research said that there could be a short-term technical pullback as both Indian and global markets have sold off heavily in the last three days.
He said that while Nifty50 has lost close to 800 points, US index Nasdaq has tested its 200-week-moving average. Both S&P 500 and Dow show strong RSI divergences against the price, he further added.
“Nifty50 keeping head above 15,670-15,700 will be extremely crucial. Traders must not disregard a broader picture where Nifty50 is precariously hanging on to a support level while the price action has formed a bearish descending triangle,” Vaishnav said.
For the day, the index closed at 15,732.10, down 42.30 points or 0.27 per cent.
Mazhar Mohammad of Chartviewindia.in said that if the index sustains above 15,650 level, there can be a chance of some short-covering led rally in Wednesday’s session.
The market is placed at the crucial support zone of around 15,700-15,600 levels, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
The inability of the bulls to show any significant upside recovery from the important support indicates chances of one more leg down to 15,600-15,500 levels before showing any upside bounce from the lows, Shetti said while expecting immediate resistance at 15,850 level.
of Motilal Oswal Securities said that Bank Nifty opened negative but managed to respect its multiple support near 33,000-33,100 zones and bounced towards 33,600 levels.
“It later failed to hold its higher zones and drifted towards 33,200,” he added.
“The index formed a small bodied Bullish candle on the daily scale and has been forming lower lows for the last 10 sessions. As long as it holds below 33,750, further weakness could be seen towards 33,000 and 32,500 whereas hurdles are placed at 33,750 and 34,000 zones,” Taparia said.
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