Tech View: Nifty forms Spinning Top; investors appear indecisive

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NEW DELHI: Nifty advanced to hit the 11,700 level on Wednesday in intraday trade but saw selling pressure, as investors turned indecisive at higher levels.
This eventually led the index to form a ‘Spinning Top’ candle on the daily chart. A higher high and low pattern for past three sessions suggested that support has shifted higher. But a weak advance-decline ratio remained a concern. Analysts said should Nifty slip below 11,720, it may trigger profit taking.
The index tested its 40-day exponential moving average, which acted as a cap for the day. It also went on to test the upper end of a rising channel on the hourly chart, said Gaurav Ratnaparkhi of Sharekhan.
“In terms of Fibonacci retracement, the index has retraced nearly 50 per cent of the post-Budget decline. Hence, the pullback is likely to subside near 117,00 and 11,720 levels, which would result in a fresh downward move. On the downside, the junction of the recent low and the daily lower Bollinger Band i.e. 11,461-11,450 will be the initial target area to watch out for,” Ratnaparkhi said.
For the day, the index rose 24.90 points, or 0.21 per cent, to 11,687. ‘Sell on rallies’ continues to be our preferred strategy, said Rajesh Palviya of Axis Securities.
“Daily strength indicator RSI and momentum oscillator Stochastic have both turned positive and are above their respective reference lines, indicating a positive bias. The trend-deciding level is 11,680. If the index stays above this level, we may witness a further rally up to 11,710 and 11,735 levels. However, a trade below this level may trigger profit booking,” he said.
Gaurav Bissa, AVP Derivatives & Technicals, LKP Securities, said the index witnessed pressure above 11,700 level, which is a Bearish Kumo pattern.
“As long as Nifty does not close above 11,720, it can slip towards 11,600. The index formed bearish harmonic AB=CD patterns on the hourly charts, which supports the postulate of some dip in Nifty,” he said.

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