NEW DELHI: Under pressure from weak global markets, NSE Nifty50 index formed an indecisive Doji pattern on daily charts, that would likely keep traders on their toes in the upcoming sessions.
Nifty50 opened lower at 17,476.05 and slipped further during the day to a low of 17,405.25, before rising to the day’s high of 17,534.35. The index settled the day at 17,511.30, down 5.55 points or 0.03 per cent.
“Nifty50 registered another indecisive formation called Doji for the second session in a row but weekly charts witnessed a Hammer kind of formation which is a positive sign hinting at a near term bottom in place at recent lows of 16,782 levels,” said Mazhar Mohammad, Chief Strategist – Technical Research, Chartviewindia.in. “However, the picture of the last two trading sessions with indecisive formations is depicting weakness for the near term.”
Nifty witnessed a strong bounce in the week gone by, which has brought the index to a crucial resistance zone of 17,500-17,600. The recent past shows that the index had stumbled near this barrier, which had attracted selling pressure.
“This time, the key DMAs are also near this zone thus putting additional pressure on the index. So Nifty50 is consolidating near this hurdle for the last couple of sessions. Structurally, the consolidation can continue for some more time before the index prepares for the next leg on the upside,” said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.
Some analysts are reading resistance at the 17,550-17,600 zone as a positive indication for the bulls to make a comeback. Hence, the consolidation movement at this level could eventually result in an upside breakout of the resistance in the near term, they believe.
India VIX, the measure of future volatility and fear on Dalal Street, eased further 3.26 per cent to 16.06 levels. This should also assuage the concerns of the bulls.
Mohammad said Nifty50 needs to get past the 17,540 level to reclaim its strength. If it succeeds, it can further head towards the 17,800 level. Whereas a close below 17,300 can confirm short-term weakness, indicating the extension of corrective and consolidation phase in the zone of 17,100-17,500.
“Though the market seems to be directionless at this juncture, intraday traders can consider shorting below 17,379 levels for modest gains placed between 17,300-250 levels whereas fresh long side opportunity shall arise if bulls manage to push the index beyond 17,540 levels,” Mohammad added.
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