Tech View: Nifty forms indecisive Doji; wait for a breakout now

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Tech View: Nifty forms indecisive Doji; wait for a breakout now


NEW DELHI: NIfty50 on Friday formed a Doji candle on the daily charts. The index continued to consolidate in a range, as traders looked undecided on the direction of the market amid weak global cues.

Nifty closed the session 10 points, or 0.07 per cent, lower at 15,163. It hit a high of 15,243 and a low of 15,081 during the day, trading in a 165-point range.

“Nifty has been consolidating in the 15,250-15,000 range for the past five sessions, signalling a short-term sideways trend. In weekly price action, the index formed a small bullish candle and higher highs and lows compared with those in the previous week. It has also closed above the previous week’s high, which signals sustained strength,” said Rajesh Palviya of Axis Securities.

For the week, the bias remains positive. Above the 15,250-15,300 range, the index may head towards the 15,500-15,800 range, Palviya said, adding that the 15,000 mark will be a crucial support to watch for on the downside.

India VIX, the barometer of volatility, dropped 3.93 per cent and fell to 22.13, signalling a waning of nervousness among the traders.

Check out the candlestick formations in the latest trading sessions

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“Interestingly, Nifty is moving in narrow ranges over the past five sessions, out of which it saw indecisive formations in four. The index may be positioning itself for the next leg on either direction, which can be sharp depending on which direction it break outs,” said Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory at Chartviewindia.in.

The wait now is for the index to show a decisive move.

“For the time being, it would be prudent to remain neutral. Traders are advised to wait for a breakout on either directions before initiating fresh trades,” Mohammad said.

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Analysts conceded that the market remains strong, but the levels where the stocks are trading are far from recent lows. “If you look at the previous data, whenever Nifty has recorded gains of more than 1,700 to 2,000 points, it has corrected by 500 to 1,000 points,” said Shrikant Chouhan, EVP for Equity Technical Research at Kotak Securities.

“Based on the charts of large-cap companies, the weakness is increasing in the short term and it would probably lead to a quick correction to the 14,850-14,750 levels. If Nifty crosses the 15,270 level and heads for the 15,500 mark, it would be advisable to buy. Below the 15,100 level, it will see further weakness. In the coming week, the focus should again be on infra, cement, CV and technology stocks,” he said.





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