NEW DELHI: The NSE Nifty50 covered up much of its morning losses to end marginally lower on Wednesday. The index formed a 'Hammer' pattern on the daily chart.
The index is expected to stay in the 10,300-10,500 range and any breakout on this range may give directional cues. The immediate support for the index is seen at the 10,350 level.
A 'Hammer' is formed when the index trades significantly lower than its opening price for the most part of the day, but manages to recoup losses and close near its opening level. The pattern has no or a small upper wick, a small body, and a long lower shadow.
"Hammer pattern indicates that buying interest was witnessed at lower levels. The index now needs to hold above the immediate multiple resistance of 10,440 to extend its move towards 10,525. On the downside, supports are seen at the 10,350-10,333 range," said Chandan Taparia of Motilal Oswal Securities.
For the day, the index fell 15.95 points, or 0.15 per cent, to close at 10,410.90.
"This price behaviour, especially after Tuesday’s bull trap, certainly augurs well for markets, suggesting that Nifty50 can continue to remain rangebound between 10,490 and 10,300 without much downsides in the near term," said Mazhar Mohammad of Chartviewindia.in.
Mohammad said the index has to continue to sustain the 10,300 level to retain its bullish bias.
"On the hourly chart, the index continues to form higher Top-higher Bottom formation indicating short-term bullish sentiment. From the current levels, the index is likely to scale further towards 10,450-10,480 levels. On the downside, an immediate support is around the 10,380 level. The Nifty is sustaining above its 20-day SMA which remains a positive sign," Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities.