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NEW DELHI: The Nifty50 struggled around the 10,430 level on Wednesday and ended up forming a Hanging Man pattern on the daily chart.
This signalled loss of positive momentum in the market.
Levels around the 10,430-10,440 range is where 50-day moving average (DMA) and 100-DMA for the index lie.
A decisive breakout above this range is a must for Nifty to continue the recent gains that extended to the fifth session on Wednesday.
While the index moved in a narrow 73-point range for the day, it saw intra-day recovery towards close.
The 50-pack index closed the day at 10,417, up 14.90 points, or 0.14 per cent.
The price pattern reflected absence of buying at higher levels, and suggested that any decline is being bought into, said Chandan Taparia of Motilal Oswal Securities.
It suggests a positive to rangebound move in the market, he said.
The index extended the upmove towards the recent swing high of 10,478.
“The first half-an-hour of trading on Thursday would be crucial and traders are advised to keep a close watch on the said level,” said Sameet Chavan of Angel Broking.
Any decisive breakout above the supply zone at 10,430-10,440 will give further strength to Nifty to move towards the 10,480-10,520 range, said Rajesh Palviya, Head – Technical Derivatives Analyst at Axis Securities.
He advised short-term traders to keep a watch on the 10,350 level, as any break below it will signal weakness.
Usually a Hanging Man formation is visible around the short-term turning points, suggesting exhaustion in the ongoing upmove, said Mazhar Mohammad of Chartviewindia.
“Momentum oscillators on the short-term charts are in the overbought zone, with no apparent sell signal.
Traders are advised to remain cautiously optimistic,” he said.
