The price action for the day was noteworthy. First, there was no follow-through to the long bearish candle on Friday. Second, the 50-pack index took support from a rising 50-day moving average and at 50 per cent retracement of 13,596-15,431 rally. Besides, the index broke below minor swing low of 14,613, before seeing recovery, said independent analyst Manish Shah.
“The entire decline from 15,431 is breaking into an AB=CD pattern. If the Nifty manages to trade above 14,980, it would mean a trend continuation pattern. The price action on Nifty50 is not bearish and it is perfectly logical to assume that we are looking at a trend continuation pattern. The day-to-day volatility in Nifty has increased sharply with huge gaps from previous closes. The underlying trend in Nifty is bullish and what once looked as a trend reversal is taking the shape of a trend continuation,” Shah said.
For the day, the index closed at 14,761.55, up 232.40 points or 1.6 per cent.
ETMarkets.comGaurav Ratnaparkhi of Sharekhan said, “The index had reached the junction of 40-day EMA and the daily lower Bollinger Band on Friday. The parameters together acted as a good support for the index.”
“The index has seen a lower Bollinger reversal and is expected to head towards the middle line in the next few sessions. The overall structure shows that the index is likely to stay in a consolidation phase for the short term where the range would be 15,000-14,400. The daily Bollinger Bands are in a contraction phase, which is in line with the expected consolidation,” he said.
Mazhar Mohammad of Chartviewindia.in believes that if the bulls manage to keep the index above 14,800 level on Tuesday, the intraday strength can get expanded towards 14,900 level.
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“The 14,638 level can be considered as near-term support as breach of this can eventually weaken the index towards 14,450 levels. However, for the time being, the trend largely shall remain sideways in 14,900-14,450 level in the near term unless the bulls manage a sustainable close above 14,920 levels,” he said.
