Tech view: Nifty50 forms bullish hammer, faces resistance at 10,850 level
NEW DELHI: The Nifty on Monday broke above its 50-day and 200-day moving averages and ended closer to its upper end of the 10,710-10,780 resistance zone. The index made higher lows for a fourth straight session, indicating the supports were shifting higher.
The index made a 'Bullish Hammer' candle on the daily chart and is now believed to find its next resistance at the 10,850 level, sooner than later.
The Nifty is now approaching the bearish gap formed on October 4 in the 10,843-10,754 zone, which now remains a crucial resistance zone to watch for, said Rajesh Palviya, Head – Technical & Derivatives Analyst at Axis Securities.
“If Nifty manages to cross above 10,850, it may scale up towards 10,900-10,950. On the lower side, 10,750-10,700 are likely to act as supports in the near term. The daily and weekly strength indicator RSI and the momentum indicator Stochastic both support bullish sentiment in the near term,” Palviya added.
On Monday, the index rose 81.20 points, or 0.76 per cent, to 10,763.40. A Bullish Hammer indicates that every small decline is being bought into, said Chandan Taparia of Motilal Oswal Securities.
“Since the last couple of sessions the index is witnessing follow through of a bullish breakout of an Inside bar pattern formed on the daily chart. Also the daily Bollinger Bands are now in expansion mode after a contraction phase, which is creating room for the price action on the upside,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.
Arun Kumar, Market Strategist, Reliance Securities, said the index closed above its crucial moving averages; the market breadth was positive, and the near-term indicators are in buy mode.
The gap will be filled at 10,845 and this level is going to be a near-term overhead resistance for the market, said Nagaraj Shetti, Technical Research Analyst HDFC Securities.
Traders can now look for stock-specific opportunities, as the broad-based momentum can pick up only on a close above the 10,840 level, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory atChartviewindia.in.