Tech View: Nifty makes solid bullish candle; follow-up buying to instill confidence
NEW DELHI: In a relief rally, Nifty50 made a solid bullish candle on Thursday to settle above its immediate resistance level, even as some analysts raised doubts over the sustainability of the rise, and believed that a follow-up buying on Friday will instill much-needed confidence among the bulls.
Nifty rebounded, trapping bears below 100-day simple moving average (SMA), as it paired almost losses in last three sessions to close near to 50-DMA at 10,190, said Mustafa Nadeem, CEO, Epic Research.
At close, the Nifty50 was at 10,166.70, up 1.22 per cent or 123 points. With Thursday's gains, the index negated lower-high lower-low formation. On the daily charts, this was the first session in eight, when the index made a bullish candle.
“Nifty50 registered a robust bull candle, suggesting that the index has kicked in the next leg of upmove. However, it will be too early to conclude that correction has ended at a recent low of 10,033, unless Nifty50 get past 10,410 levels in the next six trading sessions. In that scenario, we can easily conclude with higher degree of confidence level that correction has ended," said Mazhar Mohammad, Chief Strategist – Technical Research; Trading Advisory at Chartviewindia.in.
Trade is clearly in favour of the bulls, Mohammad said, adding that one can ride this rally for initial target placed in the zone of 10,330-10,398 levels with a stop loss placed below 10,033 level.
"On the daily chart, the index has witnessed the shift of trend to the downside forming lower-top lower-bottom formation. A minor pullback action is likely to face resistance around 10,120-10,130 levels. However, a level below 10,030 may drift Nifty50 towards 10,000-9,970 levels in near term," Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities said.