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Authors: JordanNEW DELHI: The Nifty50 saw some late recovery from a crucial support zone on Thursday even as the bulls struggled all through the session to enter the positive terrain.
The index formed a bearish candle resembling 'Hammer' pattern on the daily chart.
It made lower high and lower low.
The index may see profit booking in the extreme short term, but upward trend remains intact.
The 10,600 level holds key, said analysts.
Nifty50 hit the day's low around the bullish gap area between 10,647 and 10,628 levels, which remains a crucial support zone.
“If the index breaks below 10,650 level, then we may see more profit booking and Nifty may show further weakness towards 10,600 and 10,560 levels.
Both daily strength indicator RSI and momentum indicator Stochastic have turned negative from the overbought zone, which may remain a cause of concern," Rajesh Palviya, Head – Technical Derivatives Analyst, Axis Securities.
For the day, the 50-pack index fell 38.40 points, or 0.36 per cent, to close at 10,679.
Mazhar Mohammad of Chartviewindia.in said the gap zone between 10,647 and 10,628 levels was formed on April 27 and a bounceback of the index from the same level is vindication of the fact that the uptrend is still intact.
"As long as Nifty50 sustains above the 10,600 level on a closing basis, one can look for much higher targets placed towards the 10,900 level.
The recent high of 10,784 can act as a resistance.
It looks prudent for the traders to make use of the dips to create fresh longs with a stop below 10,600 on a closing basis," Mohammad said.
The index broke out of its consolidation range between 10,500 and 10,638 levels last week.
Chandan Taparia said the range could act as a support going ahead.
Nifty has to hold above 10,638 to witness a bounce towards 10,780.
"Nifty is in the process to making a bearish or a 'Spinning Top' candle on the weekly chart.
Friday’s movement could be meaningful to get the next course of action to decide the trend," Taparia said.
