Gaurav Ratnaparkhi of Sharekhan said the index is witnessing a bounce from the key psychological mark of 18,000, and the 20-DMA along with hourly lower Bollinger Band has induced the bulls into the action.
“The hourly momentum indicator is in sync with the pullback. Hence, the bounce is expected to continue further. So far, it has retraced 50 per cent of the recent fall. Going ahead, the Nifty50 can stretch towards the 61.8 per cent and 78.6 per cent retracement i.e. 18,360 and 18,460, respectively. The overall structure, however, shows that this is only a bounce and is unlikely to be the start of a fresh rally,” Ratnaparkhi said.
For the day, the index closed at 18,268, up 143 points or 0.79 per cent.
“The follow-through buying was seen following Monday’s Hammer formation. In the next trading session, if the index sustains above the 18,099 level, the strength may further extend towards the 18,468 level. Our twin momentum oscillators generated a buy signal after today’s move. One should retain a positive stance unless Nifty closes below 18,099 level,” said Mazhar Mohammad of Chartviewindia.in.
Independent analyst Manish Shah said the pattern on the lower time frame intraday charts shows an inverse Head & Shoulder pattern.
“The price action does point to a cessation of the decline from 18,618 and a resumption of the uptrend. The directional movement index is in a buy mode and RSI has moved above 60. Moving averages continue to display strong momentum. Be a buyer as long as Nifty holds above 17,950. With two days to go for the October F&O expiry, Nifty50 could give a big surprise on the upside,” Shah said.
