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NEW DELHI: Nifty50 on Tuesday shot up 1 per cent to erase almost all of Monday’s losses.
This was the first session in six when the index ended up forming a bullish candle.
That said, despite strong gains, the index failed to reverse the lower low formation.
The index formed a ‘Piercing Line’ candle on the daily chart.
And Tuesday’s candle did indicate the formation of counterattack of bulls from the lows, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
There could be display of strength, similar to the recent upside bounce from the 10,000 mark.
The move was a positive indication for the market going forward, Shetti said.
For the day, the index rose 100.30 points, or 0.96 per cent, to 10,582.
Chandan Taparia of Motilal Oswal Securities said the Piercing Line pattern indicated that the bulls were not ready to loosen their grip.
“The index has been consolidating between 10,450 and 10,650 levels and it requires a decisive range breakout to commence the next leg of rally.
It has taken support at the lower band of the trading range.
A hold above 10,550 is needed for an upmove towards the 10,650 level.
The immediate support is at 10,500 level,“ he said.
Mazhar Mohammad of Chartviewindia.in also believes the 200-point range needs to be broken to confirm the extension of this pullback rally.
On such a breakout, the initial challenge for the bulls would be around the 10,710 mark.
Once they manage a close above 10,710, the critical hurdle will be in the 10,754–10,840 zone, which is a bearish gap registered on October 4.
Interestingly, the 200-day moving average (at 10,759) is also placed inside this gap area.
Contrary to this, if Nifty50 violates the 10,440 level for any reason, then it shall resume the downtrend,” he said.
