Tech View: Higher high-low & bullish candle show Nifty on a strong footing

NEW DELHI: Nifty50 on Monday settled above the psychologically important 15,000 mark for the first time. This was the sixth straight session when the index made a higher high-low formation.

That said, a small bullish candle on the daily scale with an upper wick dominating the candle’s body suggested selling at higher levels. The index could take a breather now, but the momentum will remain strong as long as the index sustains above the 15,000 level, analysts said.

Nifty closed at 15,115 level, up 191 points or 1.28 per cent. It had a gapup start earlier in the day. Nagaraj Shetti of HDFC Securities said Monday’s was the second unfilled gap in a span of five sessions.

“The formation of the previous gap on February 2 could be considered a bullish breakaway gap and Monday’s gap is expected to be a bullish runaway gap, provided it remains unfilled for the next few sessions. On the occurrence of such action, the market could see more upside in the near term,” he said.

Check out the candlestick formations in the latest trading sessions

Independent analyst Manish Shah said the index has now started trading in a narrow range as volatility has subsided and there are no kneejerk actions. “The MACD has moved into the ‘buy’ mode and the RSI is showing strength above the 60 mark. The negative divergence on the RSI still persists, but there is no confirmation of any reversal trend. Support for Nifty50 lies in the 15,060-15,050 zone, and a break below this level can attract selling towards the 15,000-14,080 zone. On the upside, there is a window of opportunity for a rally toward the 15,500 level over the next 8-10 sessions,” Shah said.

The 15,500 level, analysts said, is crucial, as it is the 1.618 per cent Fibonacci extension connected from the January 2020 top to March 2020 bottom.

Chandan Taparia of Motilal Oswal Securities said the index would need to hold above 15,000 level to extend its bullish momentum towards 15,250 and 15,500 Levels. He sees support for the index at 15,000 and 14,750 levels.

Meanwhile, daily charts showed that even as Nifty has moved higher in the last four sessions, it formed indecisive patterns in three, suggesting weakening of momentum, said Mazhar Mohammad of Chartviewindia.in.

“Some sort of breather for the bulls looks inevitable in the next couple of sessions, though weakness in this regard will be confirmed on a close below the 15,014 level,” he said.