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NEW DELHI: The Nifty50 reclaimed the 10,700 level on Friday to settle above its 50-day moving average.
The index formed a large bullish candle on the daily chart, similar to a ‘Long White Day’ and would face resistance at other key short-term moving averages in the 10,730-10,750 range.
On the face of it, Friday’s rally seemed to have instilled confidence among the bulls.
As per daily timeframe charts, the formation of a long bull candle after a gap-up opening indicates the possibility of some more upward move in the market in the near term, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
“Nifty has formed a bear candle along with a long lower shadow on the weekly timeframe chart, which indicates negative bias.
At the same time, the formation of a long lower shadow signals emergence of buying interest at low levels.
All of this suggests the near-term trend would remain downward and the current bounce is unlikely to sustain for long,” the expert said.
For the day, Nifty50 surged 125.20 points, or 1.18 per cent, to 10,714.
The index went on to erase around 62 per cent of the losses that it had suffered in the previous two sessions.
If Nifty continues to show similar strength in the next session, then the possibility of bottom formation at Thursday’s low of 10,557 will be much higher.
The same can be confirmed with a close above 10,785 by Monday, said Mazhar Mohammad of Chartviewindia.in.
“However, as Nifty and Bank Nifty futures trade at a discount to spot prices, they are either suggesting lack of conviction about sustainability of this rally or building up of short positions at higher levels.
At this juncture, traders will be better off waiting for one more session to get a confirmation of strength,” the expert said.
Chandan Taparia of Motilal Oswal Securities said as long as Nifty50 holds above 10,660, it can extend its gains towards 10,770 and 10,835 levels.
On the downside, supports are seen at 10,660 and 10,620 levels, he said.
