NEW DELHI: The Nifty50 snapped a six-day losing streak and formed a Hammer-like pattern on the daily charts on Thursday. During the day, the index respected its 200-day exponential moving average (EMA) around the 10,140 mark, which is likely to act as a short-term support for the index.
Momentum indicator Stochastic has formed a bullish crossover from the oversold zone, indicating that the pullback rally may continue, said Rajesh Palviya of Axis Securities.
“The index formed a small bullish candle. If it sustains above the 10,270 mark, some pullback is possible in the 10,300-10,350 range. On the downside, the 10,200 level should act as immediate support zone,” the analyst said.
For the day, the index rose 62 points, or 0.61 per cent, to 10,261. It hit a low of 10,146 during the session.
“Finally, the bulls garnered courage to defend the 200-DMA, as the index formed a Hammer pattern. In subsequent sessions, if the index defends Thursday’s low of 10,146, the pullback shall get extended up to the 10,450 level. That said, as the Nifty50 recently broke below the 10,600-300 range, the lower end of this range i.e. 10,300 may offer resistance to the bulls on the upside,” said Mazhar Mohammad of Chartviewindia.in
Chandan Taparia of Motilal Oswal Securities said the RSI indicator is turning from its deep oversold territory. It saw support-based buying as well as short coverings and now needs to hold above its immediate resistance at 10,276 to witness a rally towards 10,333 and then 10,400 levels.
Traders are advised not to initiate short positions in the pullback rally, as the bulls have only a few more days to rule, Mohammad said.
