Tech View: Nifty50 makes small bullish candle; consolidation may continue
The index end up forming a small bullish candle on the daily chart, as the closing was a tad higher than the opening level.
The consolidation is underway and downside looks capped, say analysts.
Nifty on the day fell 14.75 points or 0.14 per cent. During the session, it hit a high of 10,397, which was the same as Thursday's closing level. The 14-day relative strength index stood at 37 level. A value below 30 is deemed overbought.
Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel Broking believes the market has slipped into a consolidation mode and the 10,340-10,300 band has earned great respect from the short sellers.
"We can see a cluster of resistances between 10,426 and 10,500 levels. Going ahead, if market has to give any convincing relief rally, it should first surpass the 10,500-mark. However, in this scenario, the broader picture does not change as we may see selling pressure at higher levels. If we have to take a directional bet, we would certainly stick with a cautious stance," Chavan said.
Chandan Taparia of Motilal Oswal Securities said if the index managed to hold above the 10,430 zone, short-term bounce could be seen towards 10,500-10,550 zone. A hold below 10,333 could extend the weakness towards 10,276 and 10,200 levels, he added.
A 60-80 points trading range for Nifty50 for three trading sessions now suggests that selling pressure might have exhausted for time being, said Mazhar Mohammad of Chartviewindia.in.
"Our twin momentum oscillators generated a buy signal on the lower time frame charts, prompting us to adopt a bullish stance for the next couple of trading sessions. Traders are advised to go long, if indices close in positive terrain in next trading session," Mohammad said.