The Nifty failed to close above the crucial resistance mark of 10,800, and 10,770 levels on closing basis as traders prefer to book profits at higher levels.
The Nifty which started with a gap-up on Thursday reclaimed its crucial resistance level of 10,800 on an intraday basis but failed to close above the same. The index still made a bullish candle on the daily charts and Supertrend indicator signals a buy which is a bullish sign.
The Nifty failed to close above the crucial resistance mark of 10,800, and 10,770 levels on closing basis as traders prefer to book profits at higher levels.
But, in the last two days, it looks like bulls have tightened their grip on D-Street as Nifty is finding support at lower levels. The next target for Nifty is placed at 10,920 only if it manages to close above 10,820.
‘Supertrend’ which is a trend following indicator just like Moving Averages and MACD (Moving Average Convergence Divergence) signaled a buy which is a bullish sign for D-Street. It is plotted on prices and their placement indicates the current trend. The MACD also witnessed a bullish crossover in Thursday’s session.
The Supetrend indicator gave a sell call on 21st May and the index made a low of 10,417 on 23rd May 2018 before bouncing back towards 10,700 levels.
The Nifty index has a strong support near 10,600, 10,650 and 10,730 levels. If the index breaks 10,698 levels in the forthcoming sessions, there is a higher probability that bears could make a comeback.
The Nifty which opened at 10,722 rose to an intraday high of 10,818. The index failed to close near its intraday high and closed 83 points higher at 10,768.
“Albeit price patterns are looking bullish with strong gap-up opening in Nifty and other major indices the fact that at the end of the day, Nifty closed below the mid-point of intraday trading range is suggesting the domination of bears at higher levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“As a consequence of this kind of price behaviour we are seeing long upper shadows on indices which are somewhat bearish in nature. Hence, if Nifty trades below 10,722 levels for atleast one hour on Friday then it may set the tone for profit booking in the coming sessions,” he said.
Mohammad further added that technically speaking more weakness can be seen if Nifty closes below 10,698 levels whereas trend reversal in favour of bears will be confirmed on a close below 10,587 levels. “Contrary to this a close above 10,820 levels shall resume the strength on the upside with an initial target of 10,920,” he said.
India VIX moved up by 1.81 percent at 12.55 levels. Overall, lower volatility with higher Put Call Ratio suggests an overall bullish bias of the market.
On the options front, maximum Put OI is placed at 10,600 followed by 10,200 and 10,500 strikes while maximum Call OI is placed at 11,000 followed by 10,800 and 10,700 strikes.
“We have seen significant Put writing at 10,700 and 10,800 strikes while Call unwinding is seen at all immediate strike price. Options data suggests a broader trading range in between 10,650 to 10,850 zones for next coming sessions,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“The Nifty index slipped from higher levels in last hour of the session and closed near to crucial zone of 10,770 marks. It has to continue to hold above 10,720 to witness an up move towards 10,800 then 10,888 zones while on the downside major supports are seen at 10,650 then 10,620 zones,” he said.
