On Friday, the index formed an Inside Bar pattern on the daily chart. Gaurav Ratnaparkhi of Sharekhan saw it as a sign of a brief pause.
“That is actually a healthy sign, as it would allow the overbought hourly momentum indicators to cool off and prepare for the next cycle on the upside. Structurally, a minor consolidation is expected to be followed by the next leg-up, which will take Nifty50 to 16,400 level in the short term,” he said.
Ratnaparkhi believes the recent gap area on the daily chart i.e. 16,176-16,146, will provide a cushion to the index.
“Our proprietary twin momentum oscillators generated a ‘sell’ signal after Friday’s price action. We expect Nifty50 to either trade sideways or see weakness next week. A close below 16,140 level can accentuate the selling pressure. If Nifty50 manages to defend the 16,210 level, the bulls can make an attempt to bounce towards 16,350 level,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.
For the day, the index closed at 16,238, down 56.40 points or 0.35 per cent. The index formed a strong bullish candle on the weekly scale – after eight weeks of small candles.
The prolonged eight weeks of sideways movement has resolved with a breakout on the upside and Nifty50 can be seen moving towards 16,500 level, said independent analyst Manish Shah.
“That said, there could be a short-term decline in the market. The mindset should be to buy on declines. Dips toward 16,000 level would be an opportunity. If Nifty50 trades beyond weekly R3 pivot at 16,303, expect further upsides towards 16,500 level,” Shah said.
